If  *  K  E  I  ( Y 

LIBRARY 

UNIVERSITY    OF 
CALIFORNIA 


7H- 


PRINCIPLES  OF  ECONOMICS 


THE  SATISFACTION  OF  HUMAN 

WANTS 


SO  FAR   AS   THEIR   SATISFACTION  DEPENDS  ON 
MATERIAL   RESOURCES 


BY 

GROVER   PEASE  1OSBORNE 


CINCINNATI 
ROBERT  CLARKE  AND  COMPANY 

1893 


Copyright  1890, 1893. 

BY  GROVER  PEASE  OSBORNE. 

All  Rights  Reserved. 


PBEFACE. 

I  have  long  been  of  the  opinion  that,  in  the  study  of 
economic  science,  we  can  safely  start  with  no  nar- 
rower subject  than  the  Satisfaction  of  Human  Wants, 
To  avoid  a  seeming  trespass  upon  the  realm  of  the 
spiritual,  it  is  necessary  to  add  the  limiting  qualifica- 
tion, so  far  as  this  satisfaction  depends  on  material 
resources^  or  the  labor  of  human  beings.  The  objec- 
tion which  naturally  occurs  to  the  reader  is  that  this 
subject  is  too  broad,  and  that  it  is  necessary  to  take  a 
single  division  of  it ;  e.  g.,  the  science  of  wealth.  But 
this  is  not  a  natural  division,  and,  I  am  convinced, 
is  too  indefinite.  For  wealth,  as  defined  by  the 
writers  who  make  it  the  subject  of  Political  Economy, 
is  simply  that  which  has  exchange  value.  Now,  ex- 
change value  is  not  solid  ground.  It  depends  on  four 
things :  the  quality  of  the  object,  the  quantity  avail- 
able, the  number  of  people  who  want  it,  and  what 
they  have  to  give  for  it.  It  is  nothing  but  a  relation 
between  -various  elements.  Water  is  wealth  under 
some  circumstances,  and  not  under  others.  I  believe 
that  the  only  method  which  will  give  us  certainty  is 
one  that  goes  back  to  the  wants  themselves,  and  to 
the  resources  for  their  satisfaction.  Wants  are  real 
things ;  the  resources  for  their  satisfaction  are  real, 

(1) 

M89672S 


Z  PKEFACE, 

Those  in  different  countries  and  different  ages  can  be 
compared.  The  relations  between  wants  and  re- 
sources, and  between  the  resources  themselves,  can 
be  studied  under  value  both  in  use  and  in  exchange. 

No  subject  is  large  in  outline,  which  is  all  that  is 
proposed  in  the  present  work.  It  is  something  to 
properly  define  a  subject,  and  state  its  natural  divi- 
sions. Instead  of  wealth,  we  consider  the  resources 
which  the  world,  or  better  a  single  nation,  has  for  the 
satisfaction  of  the  wants  of  its  people ;  next  the  num- 
ber of  people  and  the  wants  to  be  satisfied.  Who  is  ta 
own  or  control  the  various  classes  of  these  resources, 
and  what  are  the  reasons  for  such  ownership  ?  Then 
we  take  up  the  methods  by  which  the  resources  can  be 
most  economically  used ;  then  the  principles  of  their 
exchange  between  various  owners ;  and,  last,  the  dis- 
tribution of  such  resources  as  are  produced  by  modern 
methods,  among  the  various  interests  which  contribute 
to  their  production. 

The  subject  does  not,  after  all,  seem  so  much 
broader  than  that  which  political  economists  attempt 
to  cover  under  the  head  of  wealth,  and  it  has  the 
advantage  of  resting  on  firm  ground ;  we  are  more 
likely  to  see  things  as  they  are,  and  to  put  them  in 
their  right  relations.  The  first  object  of  this  work  is 
to  present  the  subject  in  proper  outline.  The  titles 
of  the  various  books  and  chapters  are  intended  to 
be  an  analysis  of  the  subject,, 

The  reader  will  perhaps  be  struck  with  the  entire 
omission  of  all  reference  to  the  tariff  question,  and 
yet  he  will  see  that  its  treatment  does  not  naturally 


PREFACE.  O 

belong  to  the  subject.  It  is,  of  course,  one  of  the 
many  applications  of  the  principles  of  exchange.  But 
the  applications  of  the  principles  of  exchange,  and  of 
those  of  the  other  natural  divisions  of  this  treatise,  are 
world-wide.  I  have  been  the  more  willing  to  omit 
such  discussion  in  order  to  emphasize  the  fact  that 
Political  Economy  is  not  the  science  of  free  trade  or 
protection,  as  nine  out  of  ten  people  suppose.  Most 
persons  who  feel  obliged  to  make  some  remark  to  a 
student  of  Political  Economy  will  at  once  ask,  "Are 
you  in  favor  of  free  trade  or  protection  ?  "  evidently 
supposing  that  there  are  but  two  kinds  of  political 
economists.  I  should  not  have  hesitated,  however,  to 
discuss  the  tariff  question  had  the  plan  of  this  treatise 
demanded  it. 

It  is  not  hi  every  respect  pleasant  to  be  classed  with 
a  "  school,"  because  one  may  not  wish  to  be  held  re- 
sponsible for  all  the  views  of  those  with  whom  he  may 
agree  in  the  main.  Many  persons  suppose  that  if 
they  know  to  which  of  three  or  four  schools  a  writer 
belongs,  they  know  all  he  has  to  say.  I  believe,  how- 
ever, that  most  of  the  fundamental  truths  of  economic 
science  are  to  be  found  in  what  has  been  called  "  the 
orthodox  English  school,"  which  includes  so  many 
-eminent  authors  in  England  and  the  United  States. 
I  have  sought  to  make  an  original  investigation  on 
what  I  believe  to  be  the  only  true  line  of  study ;  but 
truths  once  discovered,  whether  by  English  or  German 
writers,  must  be  used  by  all  who  come  after  them. 

Attention  is  called  to  the  outline  of  the  subject  as 
given  in  the  titles  of  the  various  books  and  chapters  ; 


4  PREFACE. 

to  the  Introduction,  the  first  four  chapters  of  Book  L, 
the  first  and  last  chapters  of  Book  II.,  and  the  first 
chapter  of  Book  III.  In  Book  IV.  the  reader  will 
notice  the  emphasis  put  upon  the  continued  employ- 
ment of  labor,  and  the  cost  of  labor  to  the  laborer. 
The  old  and  correct  view  of  the  distribution  of  the 
product  between  the  three  elements,  "  land,  capital 
and  labor,"  is  recognized  in  Book  VI.,  but  the  larger 
portion  of  the  space  is  devoted  to  the  further  distribu- 
tion of  the  great  share  of  economic  labor  among  the 
classes  of  laborers  whose  interests  are  naturally  op- 
posed, each  to  all  the  others.  The  reader  will  please 
notice  the  share  of  "  good  name,"  a  very  large  share 
usually  overlooked,  and  the  distinction  between  the 
laborer  who  works  for  himself,  the  laborer  who  works 
for  wages  in  production,  and  the  laborer  who  satis- 
fies wants  directly.  The  titles  of  the  chapters  under 
"  Distribution  "  give  the  final  shares. 

Some   portions   of  this   volume  were  published   in 
1890  and  1891. 

G.  P.  O. 

CINCINNATI,  July,  1893, 


CONTENTS. 


PAGE. 

INTRODUCTION— Wants, 9 


BOOK  I. 

THE  RESOURCES  FOR  THE  SATISFACTION  OF  WANTS. 

CHAPTER      I.    THE  RESOURCES  OF  NATURE, 21 

Permanent — Consumable. 

CHAPTER    II.    THE  ABILITY  TO  LABOR, 32 

Satisfies  wants  Directly  and  Indirectly. 

CHAPTER  III.    THE  PRODUCTIONS  OF  HUMAN  INDUSTRY,  .     38 
Permanent  or  Consumable — Satisfy  Wants 
Directly  and  Indirectly. 

CHAPTER  IV.     SOCIETY 46 

Satisfies  Wants  Directly  and  Indirectly. 

CHAPTER    V.    UTILITY  OF  THE  RESOURCES, 49 

CHAPTER  VI.     VALUE  IN  USE, 57 

BOOK  II. 

POPULATION— THE  NUMBER  OF  PEOPLE  WHOSE 
WANTS  ARE  TO  BE  SATISFIED. 

INTRODUCTION — The    Relation  of  Wants    to  Resources  is 

Shown  by  Value  in  Use, 65 

CHAPTER      I.    POPULATION  AND  THE  RESOURCES  OF  NA- 
TURE          66 

CHAPTER    II.     POPULATION  AND  LABOR, 87 

(5) 


6 


CONTENTS. 


CHAPTER  III.    POPULATION  AND  PRODUCED  WEALTH,  .         96 

CHAPTER  IV.    POPULATION  AND  SOCIETY, 103 

CHAPTER    V.    THE  LAW  OF  THE  INCREASE  OP  POPULA- 


TION, 


116 


CHAPTER  VI.     APPLICATIONS   OF  THE   LAW  OF  THE   IN- 
CREASE OF  POPULATION,     .....     135 


BOOK  III. 

OWNERSHIP  AND  CONTROL  OF  THE  RESOURCES  FOR 
THE  SATISFACTION  OF  WANTS. 

CHAPTER     I.    PRIVATE  PROPERTY  OR  SOCIALISM,  .     .     .    151 
CHAPTER    II.    THE  OWNERSHIP  AND  CONTROL  OF  LABOR,     160 

CHAPTER  III.     THE  OWNERSHIP  AND   CONTROL    OF   THE 

RESOURCES  OF  NATURE, 165 

CHAPTER  IV.  THE  OWNERSHIP  AND  CONTROL  OF  THE 
RESOURCES  PRODUCED  BY  HUMAN  IN- 
DUSTRY, .  * 181 

CHAPTER    V.     CONTROL  OF  SOCIETY, 189 

Individualism  and  Socialism. 

BOOK  IV. 

ECONOMICAL  USE  OF  THE  RESOURCES. 

INTRODUCTION,       . 201 

CHAPTER      I.     THE  ECONOMICAL  USE  OF  LABOR,      .     .  203 

PART     I.     The  Constant  Employment  of  Labor,       .     .  203 

PART   II.     The  Irksomeness  of  Labor 209 

PART  III.    The  Division  of  Labor,     .......  214 

PART  IV.     The  Development  of  Labor  Power,  and  the 

Prohibition  of  Certain  Forms  of  Labor,  221 


CONTENTS.  7 

PAGE. 

CHAPTER    II.    ECONOMICAL  USE  OF  THE  KESOURCES  OF 

NATURE, 225 

PART     I.     Permanent  Natural  Kesources, 225 

PART   II.     Consumable  Natural  Kesources,    ....  231 
PART  III.     Public  and  Private  Use  of  the  Resources  of 

Nature, 234 

CHAPTER  III.    ECONOMICAL  USE  OF  PRODUCED  WEALTH,  242 

CHAPTER  IV.    THE  USE  OF  THE  RESOURCE  OF  SOCIETY,  252 

CHAPTER    V.    THE    PURPOSES    FOR   WHICH    THE    RE- 
SOURCES SHALL  BE  USED,     ....  256 


BOOK  V. 

EXCHANGE. 

CHAPTER        I.    How  EXCHANGE 'SATISFIES  WANTS,  .     .  272 

CHAPTER       II.    THE  PRICE  OF  A  DOLLAR,       .v     .     .     .  275 

CHAPTER     III.    EXCHANGE  VALUES, 280 

CHAPTER     IV.    THE  LIMITS  OF  VALUES  IN   EXCHANGE 

ARE  FIXED  BY  VALUE  IN  USE,       .  285 

CHAPTER       V.     SUPPLY  AND  DEMAND, 289 

CHAPTER     VI.    COST  OF  PRODUCTION, 296 

CHAPTER    VII.    MONOPOLY, 306 

CHAPTER  VIII.     MONEY, 312 

PART        I.     Qualities  of  a  Good  Money, 313 

PART      II.     What  Determines  the  Value  of  Money  ?  325 
PART    III.     Efforts    to   Secure  a  Money  of    Uniform 

Value, 330 

CHAPTER     IX.    SUBSTITUTES  FOR  MONEY, 335 


O  CONTENTS. 

BOOK  VI. 
DISTRIBUTION  OF  PRODUCED  WEALTH. 

PAGE. 

INTRODUCTION. 

CHAPTER  I.  RENT — THE  SHARE  OF  THOSE  WHO 
HAVE  POSSESSION  OF  THE  RESOUR- 
CES OF  NATURE, 355 

CHAPTER       II.     INTEREST — THE    SHARE     OF    PRODUCED 

WEALTH, 363 

CHAPTER     III.     THE  SHARE  OF  GOOD  NAME,     ....     375 
CHAPTER      IV.     THE  SHARE  OF  MONOPOLY,     ....       382 

CHAPTER       Y.     THE  SHARE  OF  THE  PRODUCER— PROFITS 

OF  PRODUCTION, 397 

CHAPTER     VI.     THE  SHARE  OF  THE  MERCHANT — PROFITS 

OF  EXCHANGE, 406 

CHAPTER    VII.     THE    SHARE    OF    THE     LABORER    WHO 

WORKS  FOR  HIMSELF, 411 

CHAPTER  VIII.     THE    SHARE    OF    THE    LABORER    WHO 

WORKS  FOR  WAGES, 420 

CHAPTER     IX.     THE  SHARE  OF  LABOR  WHICH  SATISFIES 

WANTS  DIRECTLY,       436 

CHAPTER       X.     THE  BOOTY  OF  THE  ROBBER,    AND  THE 

WINNINGS  OF  THE  GAMBLER,     .     .       441 

CHAPTER     XI.     THE  SHARE  OF  THE  GOVERNMENT,     .     .    445 


INTRODUCTION. 

Economy  is  the  making  the  most  of  our  resources. 
The  man  who  gets  as  much  out  of  an  income  of  five 
thousand  dollars  a  year  as  other  men  from  an  income 
of  ten  thousand,  is  an  economist ;  while  he  who  lives 
on  five  hundred  a  year,  and  does  not  secure  the  com- 
forts and  advantages  which  other  men  obtain  for  three 
hundred,  is  a  spendthrift.  Economy  consists  in  using 
our  resources  to  the  best  advantage,  in  making  what 
we  have  go  as  far  as  possible. 

There  are  more  opportunities  for  the  exercise  of 
economy  in  society  or  a  nation  than  in  the  case  of  a 
single  individual;  we  have  only  to  call  to  mind  the 
difference  between  a  civilized  nation,  such  as  the  United 
States,  and  the  state  of  barbarism  in  which  the  Indians 
dwelt,  to  see  how  much  economy  has  done  toward  the 
promotion  of  material  comfort.  The  difference  is  far 
greater  than  would  at  first  appear ;  because,  under  the 


10  INTRODUCTION. 

uneconomical  methods  of  savage  life,  the  entire  terri- 
tory of  the  United  States  could  support  only  a  few 
hundred  thousand  people  ;  whereas,  with  such  economies 
as  are  now  employed,  the  same  territory  supports  more 
than  sixty  millions.  Even  if  the  people,  on  the  average, 
had  no  better  living  than  the  savages,  the  same  territory 
maintains  a  hundred  times  as  many  people.  Econom- 
ical methods  result  in  the  supporting  of  a  larger 
population,  quite  as  often  as  in  giving  a  better  living 
to  the  individual  members  of  society.  If  the  resources 
for  the  satisfaction  of  human  wants  were  unlimited; 
if  there  were  all  the  food  and  clothing  and  dwellings 
and  furniture  which  the  world  could  possibly  use ;  and 
if  these  could  all  be  renewed  without  effort — then  there 
might  be  no  need  of  the  science  of  Economics.  The 
fact  that  the  world's  resources  are  limited — that  land 
is  limited,  that  timber  and  minerals  can  not  be  had  in 
a  condition  fit  for  use  without  great  labor ;  that  man's 
power  of  labor  is  limited ;  that  there  is  not,  at  present, 
enough  of  material  goods  to  give  to  every  person  in  the 
world  a  comfortable  living — makes  it  of  the  highest 
importance  that  we  use  the  resources  we  have  to  the 
best  advantage. 

Economy  is  the  making  the  most  of  the  resources  of 
an  individual,  a  community,  or  a  nation. 

WANTS. 

The  heaven  of  the  Esquimau  is  said  to  be  a  happy 
island  in  a  warmer  climate,  with  great  kettles  of  walrus 
meat,  always  boiling,  beside  which  a  good  Esquimau 
may  sit  and  eat,  forever  and  forever.  This  is  the  Es- 


WANTS.  11 

qtiimau  idea  of  happiness ;  this  is  the  sum  of  an  Es- 
quimau's wants.  The  wants  of  a  highly  civilized  man 
are  a  thousand  times  as  great. 

There  are  some  needs  and  desires  which  belong  to 
man,  as  man,  and  which  he  has  in  common  with  the 
brutes.  Air  and  food  and  water  are  necessary  to  life. 
There  are  other  wants,  such  as  the  desire  for  personal 
adornment,  which  are  universal,  and  as  old  as  the  his- 
tory of  the  race.  Still  other  wants,  such  as  those 
which  distinguish  the  civilized  man  from  the  savage, 
have  been  developed  by  circumstances,  or  created  by 
various  influences. 

THE  CREATION,  DEVELOPMENT  AND  SUPPRESSION 
OF  WANTS. — The  rudiments  of  most  wants  exist  in  the 
nature  of  man ;  but  they  are  modified  and  developed 
and  new  wants  are  created,  by  the  circumstances  in 
which  individuals  and  nations  are  placed.  The  follow- 
ing influences  have  been  at  work  in  the  development  of 
the  wants  of  civilized  nations  as  we  find  them  to-day : 

1.  Physical  surroundings. — Climate  and  the  diffi- 
culty of  obtaining  food,  the  need  of  shelter,  danger  from 
wild  beasts  and  savage  men,  nearness  to  the  sea,  the 
variety  of    efforts  necessary  to  secure  a  livelihood — 
all  these,  and  many  other  circumstances,  have  had  much 
to  do  with'  the  development  of  men  and  nations. 

2.  Education,  as  it  is  given  by  man  and  nature. — 
The  influence  and  teaching  of  the  schools,  the  pulpit 
and  the  press,  the  home  education  of  early  life,  and 
the  influence  of  natural  surroundings,  go  to  form  one's 
wants.     Religious  and  moral  teaching  have  had  an  enor- 
mous influence  in  moulding  the  wants  of  mankind.     Mo- 


12  INTRODUCTION. 

hammedanism  and  Christianity  have  produced  different 
types  of  nations.  The  difference  between  Protestant 
and  Catholic  countries  must  be  explained,  in  part,  by 
the  influence  of  different  forms  of  religion. 

3.  The  customs  and  opinions  of  society. — By  so^ 
ciety  we  mean  the  people  with  whom  one  lives  and 
associates ;  it  may  be  the  other  members  of  an  Indian 
tribe.     Men  like  to  do  as  others  do ;  they  are  influenced 
very  greatly  by  what  others  think  of  them.     Particular 
methods  of  living,  which  may  have  become  established 
by  accident,  are  adopted  by  children  born  into  the  tribe 
or  society,  or  who  come  into  it  from  another  locality. 
Most  boys  who  learn  to  chew  tobacco,  do  so  for  no 
other  reason  than  that  it  is  the  fashion  of  the  boys  or 
men  with  whom  they  associate.     People  follow  many 
of  the   customs  of   society,   simply  because    they  are 
customs. 

4.  Habit. — A  habit  is  the  result  of  continuing  or 
repeating  any  act  for  a  sufficient  length  of  time,  and 
it  frequently  creates  a  real  want.     It  matters  not  how 
the  habit  is  begun,  whether  by  accident,  a  desire  to  con- 
form to  the  customs  of  society,  or  through  the  influence 
of  education.     When  the  habit,  good  or  bad,  is  once 
formed,  the  wants  of  the  man  are,  so  far,  changed. 

5.  Satisfying  wants  or  leaving  them  unsatisfied.— 
The  mere  fact  of  satisfying  wants  or  of  leaving  them 
unsatisfied  is  one  of  the  principal  causes  of  their  devel- 
opment, change  in  character,  or  complete  suppression. 
Many  wants,  if  regularly  satisfied,  tend  to  increase  in 
strength.     There  are  also  many  which  if  left  unsatis 
fied  will  diminish  in  intensity ;  and  some  will   die  out 


WANTS.  13 

entirely.  The  desire  for  works  of  art  is  strengthened 
by  the  study  of  art.  The  desire  for  knowledge  is  in- 
creased by  its  acquisition.  If  a  person  of  very  simple 
habits  and  tastes  is  suddenly  furnished  with  the  means 
of  gratifying  them,  he  will  be  surprised  to  see  how  fast 
his  wants  will  grow.  The  direction  of  their  growth  may 
be  determined  by  accident,  but  it  is  sure  to  influence 
his  life  for  good  or  evil.  On  the  other  hand,  if  one 
has  not  the  means  of  satisfying  many  of  the  wants 
the  gratification  of  which  is  not  necessary  to  life,  he 
turns  toward  something  else,  and  in  a  measure  loses 
his  old  desires. 

Very  close  to  this  is  the  fact  that  the  mere  turning 
of  attention  to  a  particular  want,  and  keeping  the  means 
of  its  satisfaction  before  one,  will  usually  increase  its 
intensity.  Merchants  and  manufacturers  know  that 
they  must  create  a  demand  for  some  lines  of  goods  be- 
fore they  can  be  sold.  The  vender  of  peanuts  locates 
his  stand  on  the  street  corner,  where  the  odor  of  roast- 
ing will  reach  passers-by.  The  display  of  goods  in 
shop  windows,  and  most  of  the  various  kinds  of  adver- 
tising, are  not  so  much  to  inform  people  where  they 
can  procure  certain  commodities,  as  to  create  a  demand 
for  them.  Trade  and  manufacturers  have  as  much  to 
do  with  creating  waitts  as  with  satisfying  them ;  and 
many  wants  which  manufacturers  and  merchants  have 
created,  die  out  when  these  men  no  longer  stimulate 
them.  The  saloon-keeper  not  only  satisfies,  but  creates, 
wants  by  an  attractive  display  of  his  beverages. 

The  withholding  of  the  means  for  the  satisfaction  of 
wants,  tends  to  keep  them  in  abeyance ;  but  as  soon  as 


14  INTRODUCTION. 

one  is  able  easily  to  satisfy  the  more  common  wants,  a. 
great  crop  of  others  will  spring  up.  It  is  easier  to- 
create  wants  than  to  suppress  them. 

6.  Inheritance. —  A  powerful  factor  in  fixing  the 
wants  of  a  race  is  the  law  of  inheritance.  It  has 
been  said  that  to  educate  a  man  requires  at  least  three 
generations.  The  character  of  the  men  of  New  Eng- 
land was  determined,  not  so  much  by  the  rocks  and 
the  sea  and  the  rugged  country,  as  by  the  intellectual 
and  moral  character  of  their  ancestors  in  old  England. 
The  gain  or  loss  made  in  life  is  in  a  measure  fixed, 
and  transmitted  from  father  to  son.  The  nature  of 
the  wants  of  one  generation  is  the  most  powerful  fac- 
tor in  determining  the  wants  of  the  next. 

The  historical  study  of  the  development  of  wants 
is  an  interesting  subject  by  itself,  but  is  not  necessary 
to  an  understanding  of  the  means  of  their  satisfaction. 

Still  more  important  to  the  moralist,  are  the  various 
influences  now  at  work  forming  the  wants  of  the  com- 
ing generations.  The  well-being  of  the  race  may  be 
advanced,  to  the  extent  of  all  that  lies  between  the 
highest  civilization  and  the  lowest  barbarism,  by  the 
development  or  the  suppression  of  the  various  wants  of 
its  members.  What  one  wants,  determines,  to  a  great 

^* 

extent,  what  he  is,  and  will  become.  It  is,  indeed,  one 
of  the  claims  of  Christianity  that  it  possesses  supernat- 
ural power  to  modify  and  actually  revolutionize  the 
wants  of  its  adherents.  This  is  the  highest  claim  that 
any  system  can  make.  Wants  seek  their  satisfaction, 
and  often  find  or  make  a  way  to  it  through  seeming 
impossibilities.  What  a  man  thinks  he  wants,  is,. 


WANTS.  15 

therefore,  of  the  highest  importance ;  not  only  to  him- 
self, but  to  those  who  live  in  society  with  him.  No 
field  of  study  can  be  more  inviting  to  the  practical 
philanthropist.  The,  history  of  civilization  is  the  his- 
tory of  the  development,  the  creation,  and  the  sup- 
pression of  human  wants. 

SPIRITUAL  AND  KELIGIOUS  WANTS. — There  are 
mental,  spiritual  and  religious  wants  which  can  not  be 
satisfied  by  material  resources ;  and,  to  that  extent, 
they  do  not  come  under  this  enquiry.  A  happy  state 
of  mind  may  give  one  great  comfort  in  life,  even  with 
very  indifferent  surroundings.  It  is  one  of  the  claims 
of  Christianity,  that  its  followers  may  receive  spiritual 
help ;  and  that  there  are  wants  in  the  nature  of  man 
which  only  spiritual  influences  will  satisfy.  Our 
science  has  to  do  with  satisfactions  only  to  the  extent 
that  they  depend  on  material  resources.  So  far  as  a 
house  of  worship,  an  organ,  or  the  labor  of  a  minister, 
aids  in  the  satisfaction  of  religious  wants,  our  science 
takes  account  of  them ;  but  in  so  far  as  they  must  be 
satisfied  by  divine  power,  supernatural  or  spiritual  in- 
fluences, or  the  condition  of  the  soul  itself,  this  science 
does  not  reach  them.  Surely,  this  division  between, 
the  material  and  the  spiritual  is  a  natural  one. 

While  we  thus  put  theology  and  religion  first,  as* 
the  greatest  things  in  the  world,  there  is  no  question 
that  the  Social  Sciences  hold  the  second  place.  A 
science  which  helps  us  to  use  to  better  advantage  the 
resources  which  God  has  given  us,  which  feeds  the 
hungry,  and  enables  more  people  to  live  in  cleanliness 
and  decency,  and  improves  the  condition  of  men> 
2 


16  INTRODUCTION. 

stands  next  to  the  spiritual  element  in  religion.  A 
true  social  science  is,  indeed,  one  of  the  fruits  of 
the  spiritual  power  of.  Christianity;  since  it  is  mainly 
Christian  men  who  are  engaged  in  the  practical  work 
of  philanthropy.  In  "  each  one  for  himself,"  the 
struggle  results  in  a  terrible  waste.  The  remedy  is 
not  Socialism.  It  is  the  mastery  of  social  problems  by 
those  who  love  their  fellow-men,  and  are  ready  to  sac- 
rifice something  for  their  welfare.  The  more  general, 
economic  knowledge  becomes,  the  more  likely  we  are 
to  adopt  methods  of  justice,  and  methods  which  give 
the  best  opportunity  for  the  development  of  the  indi- 
vidual. The  great  interest  in  the  study  of  Economics 
is  one  of  the  results  of  Christianity.  Let  it  be 
understood,  however,  that  it  is  a  science  by  itself,  and 
that  the  line  between  it  and  the  spiritual  element  of 
^Christianity  is  distinct  and  broad. 

ALL  WANTS  SHOULD  NOT  BE  SATISFIED. — It  is 
evidently  neither  for  the  interest  of  the  individual  nor 
of  society  that  all  wants  be  satisfied.  But  to  dis- 
criminate between  the  wants  which  should  and  should 
not  be  satisfied,  is  the  duty  of  the  moralist,  rather 
than  of  the  economist.  The  same  economic  principles 
apply,  in  the  main,  to  all  classes  of  wants,  regardless 
of  the  moral  element  in  their  satisfaction.  As  a  stu- 
dent of  economics,  one  may  seek  for  the  general  prin- 
ciples which  cover  the  economical  satisfaction  of  all 
wants ;  as  a  moralist,  the  same  person  may  be  called 
on  to  decide  what  wants  ought  not  to  be  satisfied.  In 
treating  of  wants  in  detail,  we  should  not  go  out  of 
our  way  to  show  how  the  drunkard  can  be  furnished 


WANTS.  17 

with  liquor  at  the  least  cost ;  but  the  laws  which  gov- 
ern the  production  of  corn  are  the  same,  whether  it  is 
ground  into  meal  or  distilled  into  whisky.  There 
will  be  differences  of  opinion  concerning  the  propriety 
of  satisfying*  numerous  wants.  General  principles  ap- 
ply to  all  alike.  When  it  comes  to  questions  of  de- 
,  tail,  there  are  large  classes  of  wants  that  do  not  call 
for  special  treatment.  It  is  necessary,  however,  to 
emphasize  the  fact  that  there  are  wants  which  ought 
not  to  be  satisfied. 

It  should  be  remembered,  also,  that  the  word 
want  is  not  synonymous  with  wish  or  desire.  Its 
meaning  is  more  nearly  that  of  need,  or  something 
lacking.  The  term  wants  is  not,  however,  synony- 
mous with  needs ;  it  has  a  meaning  of  its  own,  in- 
cluding elements  from  both  the  others. 

The  fact  that  a  given  desire  can  be  satisfied  by 
economic  laws  does  not  make  it  right  to  satisfy  it.  It 
is  not  uncommon  to  hear  one  attempt  to  justify  a 
wrong  by  showing  that  the  act  was  in  accordance  with 
•economic  laws;  but  this  is  no  more  a  justification 
than  for  a  murderer  to  say  that  he  killed  a  man  by 
using  his  knowledge  of  the  poisonous  nature  of  certain 
chemical  compounds,  or  of  the  laws  governing  the  ex- 
plosion of  dynamite.  All  knowledge  is  power,  and  all 
power  is  dangerous.  But  the  world  is  better  off  for 
its  knowledge  of  chemistry  and  electricity,  as  well  as 
for  its  knowledge  of  Political  Economy.  There  is  no 
doubt  that  oppression  exists,  and  that  crimes  are  com- 
mitted by  the  use  of  economic  laws.  They  are  no 
more  frequent  because  of  the  knowledge,  but  the 


18  INTRODUCTION. 

knowledge  is  sometimes  used  as  an  excuse  for  the 
crime.  One  may  rob  his  neighbor,  through  the  action 
of  the  laws  of  supply  and  demand ;  but  the  showing 
how  he  did  it,  is  no  more  a  justification  than  for  a 
desperado  to  explain  how  he  stabbed  a  man.  Thi& 
point  needs  emphasis,  because  of  the  fact  that  some 
works  on  Political  Economy  leave  the  impression  upon 
the  reader  that  any  act  is  right,  if  it  can  be  shown  to 
be  in  accordance  with  the  laws  of  supply  and  demand ; 
e.  </.,  that  it  is  right  to  buy  as  cheap  and  sell  as  dear 
as  one  can.  Whether  it  is  or  not,  depends  on  circum- 
stances, and  the  question  is  one  of  morals  rather  than 
of  economics. 


BOOK  I. 

THE  RESOURCES  FOR  THE  SATIS- 
FACTION OF  WANTS. 


BOOK  I. 

THE  RESOURCES  FOR  THE  SATISFACTION  OF  WANTS. 

CHAPTER      I.    THE  RESOURCES  OF  NATURE, 21 

Permanent —  Consumable. 

CHAPTER    II.     THE  ABILITY  TO  LABOR, 32 

Satisfies  Wants  Directly  and  Indirectly. 

CHAPTER  III.     THE  PRODUCTIONS  OP  HUMAN  INDUSTRY,     38- 
Permanent    or     Consumable  —  Satisfy 
Wants  Directly  and  Indirectly. 

CHAPTER  IV.     SOCIETY, 4t> 

Satisfies  Wants  Directly  and  Indirectly. 

CHAPTER    V.     UTILITY  OP  THE  RESOURCES,      ....       4£ 
CHAPTER  VI.    VALUE  IN  USE, 57 


BOOK  I. 

THE  RESOURCES  FOR  THE  SATIS- 
FACTION OF  WANTS. 

The  resources  which  the  world  has  for  the  satisfac- 
tion of  wants  are  properly  divided  into  four  classes : 
I.    The  Resources  of  Nature. 
II.    Labor. 

III.  The  Productions  of  Human  Industry. 

IV.  Society. 

CHAPTER  I. 

THE  RESOURCES  OF  NATURE. 

The  earth  as  it  was  before  man  appeared,  or  as  it 
has  since  been  modified  by  natural  causes,  with  the  sun 
that  shines  upon  it,  and  all  the  physical  forces  con- 
nected with  it,  are  natural  resources.  Man  had  noth- 
ing to  do  with  their  creation.  They  are  the  gifts  of 
Nature,  or  of  God,  to  the  human  race.  The  earth 
was  created  for  man,  and  intended  to  answer  the  needs 
of  each  generation,  as  its  members  are  born  and  die. 

Some  of  the  older  political  economists  comprised  all 
the  resources  of  nature  under  the  term  "Land,"  on 
the  theory  that  land  includes  the  w«ter  which  covers 

(21) 


22         RESOURCES    FOR    SATISFACTION    OF   WANTS. 

it,  the  air  above  it,  the  minerals  found  beneath  it,  the 
animals  that  roam  over  it,  and  the  forces  connected 
with  it.  It  is  a  question  of  names;  but  names  are 
important,  and  the  attempt  to  use  common  words  out 
of  their  ordinary  signification  has  been  productive  of 
great  mischief. 

1.  Land,  in  its  common  acceptation,  is  the  most 
important  of  the  natural  resources.  It  is  the  surface 
of  the  earth,  whether  covered  by  water  or  not. 

The  first  utility  which  land  possesses  for  man  is  that 
of  a  place  of  residence  ;  a  place  to  stand  or  lie  down 
upon  ;  a  place  to  build  his  wigwam  or  his  palace  ;  a 
door-yard  or  a  lawn  for  his  children's  playground  or 
his  own  enjoyment ;  a  place  to  give  him  access  to  the 
sunlight  and  the  air ;  ground  to  separate  him  from  his 
neighbors,  for,  much  as  he  desires  society,  he  likes  a  lit- 
tle space  at  times  between  himself  and  others.  He  wants 
a  little  ground,  a  portion  of  the  earth's  surface,  which 
he  can  control,  and  he  never  realizes  its  value  until  he 
is  deprived  of  it  in  a  crowded  city.  This  use  is  wholly 
apart  from  anything  which  the  land  may  produce. 
The  occupant  may  use  it  for  two  purposes,  to  make  a 
garden  or  grow  fruit ;  but  he  desires  the  land  for  out- 
door space,  even  if  he  grows  nothing  but  grass  and 
shade  trees. 

A  great  deal  of  land  is  needed  for  strictly  resident 
purposes.  Even  on  the  American  farm  a  certain  por- 
tion is  usually  set  aside  for  the  house  lot  and  grounds, 
and  the  whole  farm  is  a  range  for  the  farmer's  chil- 
dren. It  fills  to  a  partial  extent  the  wealthy  English- 
man's desire  for  a  private  park.  The  farm  is  not, 


THE    RESOURCES    OF    NATURE.  23 

•alone,  a  place  for  the  production  of  crops  ;  it  is  a 
broad  residence  property,  which  in  a  city  or  crowded 
country  can  be  enjoyed  only  by  one  with  large  wealth. 
The  second  use  of  land  is  for  commerce  and  manu- 
factures. Factories  occupy  more  land  than  is  often 
supposed,  and  some  establishments  require  many  times 
as  much  outdoor  yard  room  as  is  covered  by  buildings. 
It  is  not  the  amount  of  land,  but  the  location,  that 
makes  the  site  important ;  and  the  location  is  of  still 
more  consequence  in  commerce.  The  point  where  land 
-and  water  commerce  meet  is  vital,  and  the  land  avail- 
.able  for  commerce  at  favorable  points  is  very  limited. 
Ocean  navigation  must  terminate  in  a  harbor  where 
ships  can  lie  in  safety,  with  a  depth  of  water  where 
railroads  and  ships  can  transfer  their  freight.  There 
must  also  be  room  for  the  breaking  up  of  cargoes  and 
the  interchange  of  goods  among  different  lines  of 
transportation,  to  reach  different  countries,  and  dif- 
ferent parts  of  the  same  country  ;  in  short,  room  for  a 
commercial  city.  Land  in  such  localities  is  not  abun- 
dant. He  who  controls  it  can  levy  an  enormous  toll 
for  its  use.  So,  in  interior  transportation.  At  Chi- 
cago, railroads  meet  the  lake,  and  a  large  tract  of  land 
is  required  for  commercial  purposes.  Roads,  i.  e., 
facilities  for  communication  and  transportation,  re- 
quire land,  and  a  great  deal  of  it.  The  acreage  of  the 
wagon  roads  in  the  United  States  is  large.  Railroads 
usually  have  a  hundred  feet  in  width,  twelve  acres  to 
the  mile,  and  to  the  land  thus  used  must  be  added 
large  acreage  for  yard  room  in  cities,  and  still  more 
land  rendered  useless  by  railroad  traffic. 


24         RESOURCES    FOR    SATISFACTION    OF    WAXTS. 

The  uses  of  land  for  residence,  manufactures  and 
commerce  were  to  a  great  extent  overlooked  in  the- 
past.  Eicardo  wrought  out  his  principles  of  "  diminish- 
ing returns  "  and  the  whole  theory  of  "  rent "  from 
agricultural  land.  In  a  new  country,  such  as  the 
United  States  was  a  few  years  ago,  agriculture  is  the 
main  purpose  for  which  land  is  needed.  The  pro- 
portion of  labor  required  for  the  production  of  raw 
materials  a  hundred  years  ago  was  many  times  greater 
than  now.  In  the  early  discussion  of  land,  therefore,, 
almost  all  illustrations  were  drawn  from  agricultural 
land,  and  almost  all  reasoning  based  upon  it.  While 
land  used  for  residence,  manufactures  and  commerce  is 
still  small  in  area  when  compared  with  that  used  for 
agriculture,  it  is  large  in  the  aggregate.  The  most 
troublesome  questions  center  about  it.  Principles 
which  appear  abstract  in  connection  with  land  in  the 
country,  become  very  practical  when  applied  to  land  in 
cities. 

Land  for  agriculture,  as  for  all  other  purposes,  should 
be  considered  as  mere  extension.  The  bottom  lands  of 
rivers  have  a  wealth  of  vegetable  mould  which  is  a- 
mine  to  draw  upon,  and  the  barren  sand  or  the  disin- 
tegrating limestone  can  be  made  productive  by  the- 
efforts  of  man ;  but  without  the  acreage,  no  man  can 
make  a  farm.  The  natural  fertility  of  the  soil,  ac- 
cumulated through  ages,  should  be  classed  with  mines,. 
;which  can  be  exhausted  in  the  using.  The  land  is 
measured  by  acres,  not  by  fertility.  Land  is  merely 
the  extension  of  the  earth's  surface. 


THE    RESOURCES    OF   NATURE.  25 

2.  Water  may  be  placed  next  to  land  in  enumerat- 
ing the  Natural  Resources.  It  covers  three-fourths  of 
the  earth's  surface ;  it  separates  continents  with  ad- 
vantage to  nations;  it  is  a  highway  for  commerce. 
And  this  highway  is  not  a  canal  which  is  only  a  line 
between  two  points ;  it  is  a  body  of  water  which  affords 
each  country  an  opportunity  for  commerce  with  all  the 
others.  No  railway  system  can  be  so  perfect  as  an 
ocean  over  which  ships  can  sail  anywhere.  By  it  the 
cost  of  carriage  is  reduced  below  that  of  any  other 
possible  means.  Lakes  and  rivers,  with  the  oppor- 
tunity for  canals,  form  a  system  of  interior  water 
transportation  of  scarcely  less  importance. 

The  influence  of  the  oceans  and  great  lakes  on  climate 
must  not  be  forgotten.  They  insure  an  abundant  rain- 
fall, and  make  the  general  cultivation  of  the  soil  pos- 
sible. Indeed,  the  water  which  covers  so  much  of  the 
earth  may  be  said  to  make  the  rest  habitable,  and  to 
afford  to  continents  and  nations  that  isolation  which  in 
the  past  has  been  necessary  to  the  highest  civilization. 

These  large  bodies  of  water  also  satisfy  wants, 
directly,  by  affording  countless  desirable  residence 
sites.  The  cottage  by  the  sea  or  lake,  in  summer,  has 
become  popular  because  of  the  water  and  the  air.  A 
city  on  the  ocean  harbor  or  the  lake  has  an  advantage 
over  one  in  the  interior.  The  United  States  would 
lose  immensely  were  the  great  lakes  to  be  filled  by 
some  convulsion  of  nature.  There  are  many  persons 
who  would  like  to  see  them  drained,  if  they  could  get 
possession  of  the  land  at  the  bottom ;  but  the  loss  to- 


"2-3         RESOURCES    FOR    SATISFACTION    OF   WANTS. 

the  whole  country  would  be  a  thousand  tunes  the  gain 
of  the  few. 

The  use  of  water-power  is  also  of  great  advantage. 
It  is  true  that  the  real  power  here  is  the  force  of  gravi- 
tation, and  the  sun-force  which  lifts  the  water  from  the 
ocean  to  fall  in  rain  on  high  levels,  so  that  the  force  of 
gravitation  can  act  on  it  in  its  descent  to  the  sea ;  but 
the  water  is  a  convenient  means  of  using  this  force, 
and  the  water-power  of  the  world  enables  us  to  satisfy 
wants  with  far  less  labor.  It  will,  also,  endure  after 
the  coal  has  been  burned  up. 

For  cleansing  purposes  no  substitute  could  be  found. 
The  earth  is  washed  by  the  rain,  and  the  use  of  the 
hose  from  water-works  is  one  of  the  methods  of  mak- 
ing great  cities  habitable.  For  domestic  uses  the 
amount  of  water  required  is  small,  but  its  value  is 
very  high.  When  the  quantity  is  greatly  reduced,  its 
value  becomes  that  of  life  itself.  For  drinking  pur- 
poses, it  is  simply  one  of  the  resources  of  nature, 
absolutely  essential,  without  which  everything  else 
would  be  worthless.  The  difficulty  of  supplying  a 
dense  population  with  pure  water,  or  even  with  water 
fit  for  drinking,  is  very  great. 

3.  The  Atmosphere  is  the  next  resource  which 
nature  furnishes  to  satisfy  wants.  It  is  usually  left 
out  of  the  account,  simply  because  so  abundant.  In 
taking  an  account  of  stock,  in  order  to  see  what  we 
Iiave  to  satisfy  wants  with,  we  are  not  to  omit  the 
most  important  resource  of  all,  simply  because  there 
happens  to  be  a  good  deal  of  it.  We  are  rather  to  be 
thankful  that  the  stock  is  so  large.  This  resource 


THE   RESOURCES    OF   NATURE.  2T 

might  have  been  placed  first,  because  it  is  most  essen- 
tial of  all  to  life.  One  may  live  for  a  considerable 
period  with  nothing  else  ;  but  five  minutes'  deprivation 
of  air  is  fatal.  There  are  places  and  times  when,  not- 
withstanding its  abundance  on  the  earth,  air  suitable 
for  human  beings  is  difficult  to  obtain.  Some  one  has 
imagined  that  the  time  will  come  when  it  will  be 
pumped  into  the  densely  populated  parts  of  cities  and 
distributed  as  water  now  is.  The  problem  of  supply- 
ing it  pure  to  our  homes  in  the  winter  season,  has  re- 
ceived much  attention.  At  present,  however,  we  are 
only  taking  account  of  stock,  and  put  down  an  im- 
mense volume  of  air,  comparatively  pure  over  the 
ocean,  and  with  varying  qualities  on  the  land. 

4.  The  fourth  group  of  resources  is  the  Forces  of" 
Nature,  including  the  power  exerted  by  the  sun,  its 
light,  heat,  and  chemical  influence  ;  the  attraction  of 
gravitation,  and  the  molecular  forces.  The  sun  is  as 
much  a  resource  for  the  production  of  grain  as  the 
land.  The  power  of  gravitation  is  not  only  utilized  in 
the  water-wheel,  but  holds  buildings  in  their  places.. 
All  growth  of  plant  life  is  dependent  on  natural  forces. 
With  the  creation  of  these  forces  man  has  had  nothing 
to  do  ;  they  existed  before  him ;  they  act  continuously 
with  a  power  beside  which  the  physical  power  of  man 
is  infinitesimal.  Man  may  discover  and  use,  he  can  not 
create  or  increase  them.  It  must  not  be  forgotten,  in 
all  our  future  reasoning,  that  we  have  this  power  of 
natural  forces,  great  almost  beyond  human  conception^ 
as  one  of  the  resources  for  the  satisfaction  of  wants. 


28        RESOURCES   FOR   SATISFACTION    OF   WANTS. 

5.  The  Minerals  of  the  earth  constitute  the  fifth 
resource.     Man  has  had  nothing  to  do  with  their  for- 
mation ;  he  digs  them  out  when  he  needs  them.     It 
may  cost  him  some  labor  to  find  them,  but  he  only  dis- 
covers, he  does  not  create  them.     In  this  respect  they 
are  like  the  natural  forces.     With  minerals  must  be 
classed  the  natural  fertility  of  the   soil.     This  natural 
fertility,  formed  by  the  decay  of  vegetation  in  the  past, 
much  as  the  coal  is  formed  from  vegetable  matter,  is 
something  apart  from  the  land ;  and  may  be  used  up, 
leaving  us  many  acres  of  land  as  before.     In  popular 
language  the  land  is  said  to  be  exhausted ;  which  means 
that  its  fertility  is  exhausted,  as  a  mine  is  exhausted. 
The  land  remains,  and  can  be  made  productive  again. 

6.  The    sixth    natural  resource  is  the   Forests  or 
Timber. 

7.  To  the  list  must  be  added  Wild  Animals  and 
Fish,  which  are  very  important  resources  for  the  satis- 
faction of  the  wants  of  a  savage. 

This  completes  the  list  of  resources  which  nature 
provides  for  man.  It  is  well  to  spread  them  all  out 
before  us,  that  we  may  see  what  we  have,  and  not  con- 
fuse them  with  other  general  classes  yet  to  follow. 
They  are : 

1.  Land. 

2.  Water. 

3.  Air. 

4.  The  Forces  of  Nature. 

5.  The  Minerals  and  Natural  Fertility  of  the  Soil. 

6.  Timber. 

7.  Wild  Animals  and  Fish. 


THE   KESOURCES    OF   NATURE.  29 

PERMANENT  AND  CONSUMABLE. — The  first  four  of 
the  Natural  Resources  are  permanent ;  that  is,  they 
are  not  destroyed  by  use.  The  air  and  the  water  and 
the  land  are  used  by  the  men  of  each  generation  as  it 
occupies  the  earth,  and  are  left  to  those  who  follow. 
The  sun  shines  eternally,  and  the  forces  of  nature  will 
act  forever.  The  land  can  not  be  destroyed  by  the 
using ;  great  temporary  injury  may  be  inflicted,  but 
not  beyond  the  power  of  repair. 

It  is  not  so  with  the  last  three  resources.  Minerals 
are  consumed  in  the  using.  Coal  is  destroyed  in  the 
burning;  and  although  iron  continues  to  exist  in  an- 
other form,  the  ore  from  which  it  is  made  is  destroyed. 
When  the  bed  of  ore  is  exhausted,  it  will  not  be  re- 
plenished within  any  time  we  can  take  into  account. 
When  a  substance  is  transformed,  as  iron  ore  into 
iron,  it  is  said  to  be  consumed,  in  the  production  of 
something  else.  We  have  a  new  substance,  but  no 
longer  the  old :  we  can  not  have  both. 

Timber,  wild  animals  and  fish,  while  they  are  con- 
sumed in  the  using,  differ  from  the  minerals,  in  that 
they  may  be  speedily  reproduced  by  nature,  alone,  or 
with  the  efforts  of  man.  The  difference  is,  that  while 
the  ore  is  consiuned  in  the  production  of  commercial 
iron  which  goes  to  erect  a  building,  and  while  the  tim- 
ber is  cut  down  and  consumed  in  the  production  of 
lumber  for  the  same  building,  the  timber  will  grow 
again.  The  hard-shot  forest  is  soon  replenished  with 
game.  Fish  may  be  taken  for  ages,  and  nature  main- 
tain the  supply.  All  of  these  three  classes  of  Natural 
.Resources — minerals,  timber  and  fish — are  Consuma- 


30         RESOURCES    FOR    SATISFACTION    OF   WANTS. 

~ble  Resources,  because  consumed  in  the  using ;  and  the 
distinction  between  them  and  the  Permanent  Re- 
sources is  quite  important. 

Our  classification  will  then  stand : 

I.    Resources  of  Nature — 

1.  Land.  •>» 

2.  Water.  [  Permanent  Natural 

3.  Air.  Resources. 

4.  The  Forces  of  Nature.     J 

5.  Minerals.  ^  Consumable. 

6.  Timber.  )   Consumable,  but  can 

7.  Wild  Animals  and  Fish.   )        be  replaced. 
DIRECTLY    AND    INDIRECTLY. — The    Resources   of 

Nature  satisfy  wants,  directly  or  indirectly.  The  air 
when  breathed  satisfies  a  want  directly.  So,  also,  land 
when  used  for  residence  purposes.  The  occupant 
wants  the  land,  and  not  something  that  can  be  pro- 
duced from  it.  The  savage  satisfies  his  wants,  directly 
by  wild  fruits,  fish  and  game. 

A  resource  satisfies  wants  indirectly  when  it  aids  in 
the  production  of  some  other  resource,  or  enables  some 
other  resource  to  be  used  in  satisfying  a  want.  It  is 
only  a  means  to  an  end.  Such  is  land  used  for  agricul- 
ture, or  a  water-power  employed  in  turning  the  wheels- 
of  a  factory.  Coal  satisfies  wants,  directly,  when  burned 
in  a  parlor  grate ;  indirectly,  when  used  in  making 
steam  for  a  factory. 

We  shall  find  that  this  distinction  between  the  satis- 
faction of  wants  directly,  or  indirectly,  runs  through 
all  of  our  subject,  and  should  never  be  lost  sight  of. 

It  will  be  convenient  often  to  speak  of  the  Resources. 


THE    RESOURCES    OF   NATURE.  31 

of  Nature  as  Natural  Wealth.  There  is  a  difference 
of  opinion  as  to  the  proper  use  of  the  term  "  wealth," 
but  with  the  qualifying  word  there  is  no  danger  of 
misunderstanding,  and  this  use  of  the  term  is  also  in 
accordance  with  popular  language.  It  is  the  wealth 
of  nature,  or  Natural  Wealth. 


CHAPTER  II. 

THE  ABILITY  TO  LABOE. 

Next  to  the  Resources  of  Nature  comes  that  of  hu- 
man labor.  The  Natural  Resources  are  placed  first,  be- 
cause they  are  first  in  the  order  of  time.  Without  them 
the  existence  of  man  would  be  impossible.  Labor  comes 
next,  because  it  first  makes  use  of  the  Natural  Resources ; 
and  is  thus  next  in  the  order  of  time. 

We  should  distinguish  the  ability  to  labor  from  the 
labor  actually  put  forth.  It  is  the  ability  which  men 
possess  which  constitutes  the  Resource,  and  this  ability 
may  exceed  many  times  the  labor  actually  performed. 
We  are  now  taking  account  of  stock, — of  what  the 
world  has  to  satisfy  wants  with, — and  this  account 
must  include  all  the  ability  which  men  possess  to  per- 
form labor  of  any  kind,  of  either  hand  or  brain. 

Labor,  in  all  works  on  Politial  Economy,  includes 
the  efforts  of  both  body  and  mind.  The  terms 
"  Working  man  "  and  "  Laboring  man  "  are  used  in 
the  popular  sense  to  denote  muscular  labor,  but  the 
simple  term  "  Labor  "  is  used,  especially  in  economic 
writings,  to  include  mental  labor  as  well  as  physical. 
We  are  obliged  to  have  some  general  term,  and 
there  is  no  other.  It  is  not  a  question  of  the  irksome- 
ness  of  the  different  kinds  of  labor;  it  is  only  the 
power  to  do,  to  accomplish  something  in  satisfying  the 
world's  wants.  It  is  indeed  impossible  to  separate 

(32) 


THE   ABILITY    TO    LABOR.  33 

entirely  mental  and  physical  labor.  The  lowest  form 
of  labor  requires  some  brains,  else  the  work  is  better 
done  by  a  machine ;  and  the  more  brains,  the  better. 
The  work  of  the  trainmen  on  the  railway  would  per- 
haps be  classed  as  manual  labor,  yet  a  high  order  of 
mental  effort  is  required.  The  man  who  knows 
nothing,  will  find  that  muscular  strength  will  not  put 
lim  in  charge  of  a  locomotive ;  though  some  strength 
and  endurance  are  required  in  addition  to  mental  abil- 
ity, in  order  to  run  it.  The  profession  of  civil  engin- 
eering would  be  classed  as  brain  work,  yet  some 
"branches  of  it  require  more  muscular  exertion  than  is 
put  forth  by  a  street  laborer.  What  the  world  wants 
is  results,  whether  accomplished  by  manual  or  mental 
labor,  or  both  combined.  Under  the  general  term 
*'  Labor  "  we  therefore  include  all  the  ability  which  men 
possess  to  do  the  world's  work. 

There  is  great  difference  in  the  mere  muscular 
-strength  of  men,  and  still  more  difference  in  the  en- 
ergy with  which  they  use  that  strength.  One  English- 
man is  worth  five  or  six  of  the  natives  of  India,  even 
for  the  most  common  employment.  The  skill  which 
some  men  possess,  the  knowledge  they  have,  and  the 
intelligence  that  directs,  are  of  far  more  importance 
than  the  power  to  lift  and'  carry.  We  can  not  sepa- 
rate the  knowledge  and  skill  of  the  man  from  the 
man  himself .  All  the  power  he  has  to  do,  the  skill  of 
•eye  or  hand,  all  that  he  knows,  his  intellect  and  judg- 
ment, his  mental  capacity  to  acquire  knowledge  and 
,skill, — all  these  go  to  make  up  his  ability  to  labor. 
"The  locomotive  engineer  easily  does  his  work,  because 


34         RESOURCES    FOR    SATISFACTION    OF    WANTS. 

of  his  knowledge  and  skill  and  mental  make-up.  A. 
hundred  Indians  could  not  do  it ;  the  more  there  were 
of  them,  the  worse  it  would  be  for  the  engine.  The 
power  of  a  successful  physician  consists  wholly  in  his 
knowledge  and  skill  and  judgment.  No  amount  of 
ignorant  labor  could  do  what  he  does.  The  manage- 
ment of  railways  and  factories,  rendering  the  physical 
labor  employed  many  times  as  efficient,  is  the  result  of 
skill  and  knowledge  and  mental  qualities.  The  most 
valuable  ability  to  labor  is  that  of  superintendence. 
One  man  may  save  the  labor  of  a  thousand.  A  poor 
superintendent  may  cost  his  company  many  times  the 
salary  of  a  man  competent  for  the  place.  The  great 
labor-saving  inventions  are  due  to  intelligence  and 
knowledge.  The  power  to  invent  is  the  power  to  la- 
bor ;  and  one  man  by  an  invention  may  save  the  labor 
of  a  multitude. 

Under  the  ability  to  labor  we  must  also  include  all 
the  knowledge  and  experience  gained  from  past  ages. 
This  knowledge  and  experience  can  be  used  only  as  it 
is  known  by  living  men.  There  are  "  Lost  arts." 
What  the  world  possessed  in  them  died  with  the  men 
who  understood  them.  If  they  are  rediscovered,  so 
much  more  is  added  to  the  power  of  labor. 

Unlike  the  Natural  Resources,  which  remain  the 
same  from  age  to  age,  Labor  is  a  continually  changing 
force.  For  the  purpose  of  satisfying  wants,  its  power 
has  increased  many  times  since  civilization  began,  and 
is  increasing  with  great  rapidity  to-day.  A  hundred 
men  can  do  the  work  done  by  a  thousand  a  century 
ago,  not  alone  because  of  machinery ;  but  because  of 


THE    ABILITY    TO    LABOR.  35 

the  skill  in  using  it,  because  of  the  knowledge  of  new 
methods.  The  high  degree  of  skill  and  mechanical 
ingenuity  shown  in  the  United  States  is  the  result  of 
training  for  generations.  The  natural  aptitude  is 
largely  inherited.  The  power  of  the  world  to  work,  is 
the  fine  hand,  and  brain,  and  mind  inherited  from  the 
past.  All  the  knowledge  in  the  world  to-day,  even  the 
habit  of  labor,  is  inherited ;  and  it  is  useless  to  expect 
to  educate  a  savage  race  to  a  high  degree  of  ability  to 
work,  except  through  generations.  Labor,  as  a  re- 
source for  satisfying  wants,  is  the  ability  of  men  to 
-do.  It  is  more  mental  than  physical.  In  this  age, 
muscular  power  is  the  smallest  part  of  it.  The  knowl- 
edge of  Nature's  resources  and  laws,  as  discovered  by 
physical  and  chemical  research,  and  the  practical  spirit 
and  power  of  invention  which  enable  the  men  of  the 
present  day  to  make  use  of  the  idle  forces  of  the 
past, — to  use  steam  and  electricity  where  past  ages 
•employed  human  muscle, — these  make  up  the  greater 
part  of  the  resource  of  Labor. 

The  ability  of  a  people  to  labor,  therefore,  does  not 
depend  on  their  number,  so  much  as  on  their  physical 
.and  mental  qualities.  We  should  also  add  their  mor- 
al qualities ;  since  men  of  moral  character,  when  the 
comparison  is  made  between  large  numbers,  are  able 
to  accomplish  much  more  labor  during  a  lifetime  than 
others.  The  ability  of  the  native  white  population  of 
the  United  States  exceeds  by  a  thousand-fold  that  of 
an  equal  number  of  people  in  Central  Africa.  No 
mistake  is  greater  than  to  estimate  the  ability  of  a  na- 
tion to  labor  by  the  number  of  its  people.  The  time 


36         RESOURCES    FOR    SATISFACTION    OF   WANTS. 

may  come  when  all  the  work  that  is  done  to-day  can 
be  done  by  one-tenth  of  the  people  now  engaged.  If 
this  should  be  the  case,  the  result  would  not  be  the 
idleness  of  the  other  nine-tenths,  but  the  doing  of 
more  work,  and  the  better  satisfaction  of  wants. 

DIRECTLY  AND  INDIRECTLY. — Labor  satisfies  wants 
directly  or  indirectly :  Directly,  when  one  does  some- 
thing for  himself  or  another;  indirectly,  when  he 
helps  to  produce  some  articles  for  use.  As  soon  as 
a  boy  is  old  enough  to  wash  and  dress  himself,  he  has 
begun  to  satisfy  some  of  his  own  wants,  directly.  The 
amount  of  labor  expended  in  doing  for  one's  self  and  by 
members  of  a  family  in  caring  for  one  another,  is  a  large 
part  of  all  the  manual  labor  performed.  Most  politi- 
cal economists  leave  it  out  of  the  account  altogether,, 
because  it  is  not  paid  for.  Such  labor  is  not  the  only 
kind  for  the  direct  satisfaction  of  wants.  The  teacher, 
preacher,  singer,  lawyer,  and  physician  satisfy  wants- 
directly,  by  teaching,  preaching,  conducting  one's  case 
at  law,  and  prescribing  when  one  is  ill. 

Farmers,  on  the  other  hand,  satisfy  wants  indi- 
rectly. Their  labor  is  employed  in  the  production  of 
commodities,  wheat,  corn,  cotton,  beef,  etc.,  which 
commodities  satisfy  wants.  Neither  is  it  the  labor  of 
the  artist,  but  the  picture  he  has  painted,  that  we 
want.  He  satisfies  a  want  indirectly,  through  his  pic- 
ture. 

Many  of  the  older  political  economists  divided  la- 
borers into  "  Producers  and  non-producers,"  which, 
division  has  been  very  misleading,  and  was  frequently 
supposed  to  reflect  unfavorably  on  those  classed  as 


THE    ABILITY    TO    LABOR.  37 

non-producers  ;  whereas,  many  of  the  so-called  non- 
producers  are  engaged  in  the  most  important  work  of 
the  world.  They  do  not  produce  commodities,  for  the 
reason  that  they  satisfy  wants  directly ;  and  the  ob- 
ject which  the  world  has  is  not  production,  but  the 
satisfaction  of  wants.  Some  of  the  world's  workers 
satisfy  wants  directly ',  by  a  short  cut ;  others  satisfy 
them  in  a  more  roundabout  way,  by  producing  some- 
thing which  can  be  used  in  satisfying  wants.  A 
singer  satisfies  wants,  directly,  when  he  sings  before 
an  audience ;  a  sculptor  satisfies  a  want,  not  directly, 
but  by  producing  a  statue  from  a  block  of  marble, 
and  the  statue  satisfies  the  want.  Here  are  two  ar- 
tists, perhaps  of  equal  rank;  the  one  satisfies  wants 
directly,  the  other  indirectly.  If  it  be  asked,  which 
class  is  engaged  in  the  more  honorable  employment, 
the  reply  is,  there  is  no  difference  so  far  as  this  divi- 
sion is  concerned ;  since  the  employments  usually 
counted  the  most  honorable  are  divided  between  the 
two.  The  preacher,  teacher  and  lawyer  satisfy  wants 
directly;  the  editor  and  author  of  books,  indirectly. 
The  distinction  is,  however,  of  the  greatest  economical 
importance,  and  of  more  importance  in  the  considera- 
tion of  Labor  than  of  the  other  Kesources. 


CHAPTER   III. 
THE  PRODUCTIONS  OF  HUMAN  INDUSTRY. 

It  may  at  first  appear  that  the  goods  produced  by 
human  industry  are  of  so  many  kinds  as  to  defy  classi- 
fication ;  yet  a  little  reflection  will  show  that  nearly  all 
of  the  most  important  fall  at  once  into  very  few 
classes,  and  that  for  many  reasons  it  is  important  that 
these  few  classes  be  sharply  defined. 

1.  Buildings.  A  large  part  of  all  the  produced 
wealth  in  the  world  is  in  buildings.  They  are  a  per- 
manent resource ;  for  while  nothing  made  by  man  en- 
dures forever,  these  endure  for  many  years.  They  are 
permanent  in  contrast  with  food,  which  is  consumed 
in  the  satisfaction  of  hunger ;  or  with  clothing,  which 
lasts  perhaps  a  year,  and  when  once  worn  is  practically 
unfitted  for  other  persons.  Permanent  resources  once 
produced  remain  to  satisfy  wants  for  a  long  period, 
often  for  successive  generations ;  while  consumable  re- 
sources must  be  replaced  with  new  productions  each 
year.  One  builds  a  house  for  a  lifetime ;  he  raises  a 
new  crop  of  wheat  each  year. 

Buildings  are  of  two  classes :  Residences,  most  pub- 
lic buildings,  and  others  which  satisfy  wants  directly ; 
and  factories  and  commercial  buildings,  which  satisfy 
wants  indirectly.  A  house  is  an  object  in  itself. 
When  one  has  gained  it,  perhaps  at  the  cost  of  many 
years'  labor,  he  feels  that  a  very  important  want,  both 
(38) 


PRODUCTIONS    OF   HUMAN    INDUSTRY.  39 

for  himself  and  family,  has  been  satisfied  for  his  life- 
time. The  resource  is  permanent,  and  it  satisfies 
wants  directly.  Dwellings  must  necessarily  form  a 
very  large  portion  of  all  the  produced  resources  in  the 
world,  since  every  family  needs  a  dwelling  of  some 
kind ;  and  most  civilized  men  are  willing  to  expend  a 
large  part  of  their  labor  in  securing  the  use  of  one  for 
their  families. 

Buildings  which  satisfy  wants  indirectly  also  com- 
pose a  large  portion  of  the  produced  wealth  in  the 
world.  The  costly  stores  and  warehouses  of  a  great 
city,  the  factories  of  cities  and  factory  towns,  nearly 
.all  the  structures  in  the  land,  except  residences,  sat- 
isfy wants  indirectly.  Factories  are  erected,  not  as  an 
end  in  themselves,  but  to  produce  something  that  will 
satisfy  wants. 

Buildings  are  therefore  divided  into  two  classes: 
Dwellings,  with  a  few  others  satisfying  wants  directly ; 
-and  buildings  satisfying  wants  indirectly. 

2.  fools  and  Machinery.     Next  to  factories  and 
buildings  used  for  commercial  purposes,  come  tools  and 
machinery.     Even    tools    form    a  considerable    stock, 
since  some  must  be  in  the  hands  of  every  workman ; 
but  the  machinery  in  the  modern  factory,  and  all  that 
in  use  in  our  present  civilization,  of  itself  exceeds  the 
produced  wealth  of  ancient  times.     With  a  few  excep- 
tions,  tools   and  machinery   satisfy  wants   indirectly; 
they  are  not  an  end,  but  the  means  of  further  produc- 
tion. 

3.  Roads.     Roads    include    all    improvements   011 
land  or  water  by  which  transportation,  travel  or  com- 


40         RESOURCES    FOR    SATISFACTION    OF   WANTS. 

munication  is  facilitated;  such  as  common  highways,, 
railroads,  street  railways,  river  and  harbor  improve- 
ments, canals,  telegraph  and  telephone  lines,  etc.  A 
lake  or  ocean  needing  no  improvement  is  solely  a  re- 
source of  nature  ;  ships  sail  over  it  as  an  emigrant 
drives  his  team  over  a  trackless  prairie.  But  when  a 
highway  is  turnpiked  and  drained,  a  railroad  bed  is 
graded  and  blasted  and  ironed,  telegraph  lines  are 
erected,  rivers  are  cleared  and  dredged,  and  harbors- 
are  improved,  the  improvements  are  a  part  of  the  Pro- 
ductions of  Human  Industry.  Roads  are  an  impor- 
tant element  of  civilization.  They  include  nothing 
but  the  track  or  the  wires  of  a  telegraph  line.  The 
wagons  driven  on  the  highway,  the  rolling  stock  of  a 
railroad,  the  ship  and  the  canal  boat  belong  to  the 
class  of  Tools  and  Machinery. 

4.  Improvements  on  Land.  We  must  always  dis- 
tinguish sharply  between  land  and  its  improvements. 
Land  is  the  gift  of  nature,  and  can  not  be  increased ; 
improvements  are  the  work  of  man.  Both  buildings- 
and  roads  are  usually  regarded  as  improvements  on 
land,  and  in  law  are  classed  as  real  estate.  Land  is- 
so  essential  that  it  is  impossible  to  produce  many  per- 
manent resources  without  connecting  them  in  some 
way  with  it.  Buildings  can  not  be  erected  except  upon 
it ;  one  must  get  possession  of  a  piece  of  ground 
before  he  can  build.  Roads  can  be  made  only  over 
it.  But  while  buildings  and  roads  are  properly  enough 
called  improvements  on  land,  they  are  so  distinct,  so- 
numerous  and  important,  that  it  is  more  convenient  to 
put  them  in  a  class  by  themselves ;  and  to  reserve  the 


PRODUCTIONS    OF   HUMAN   INDUSTRY.  41 

title  "  Improvements  on  Land  "  for  those  more  closely 
connected  with  the  soil. 

The  most  important  of  these  are  improvements  on 
agricultural  land ;  such  as  the  drainage  of  swamps, 
the  increase  in  the  fertility  of  the  soil  by  well-known 
methods  of  cultivation — hedges,  orchards,  vineyards, 
fences,  and  all  that  goes  to  make  a  good  farm  better 
than  land  in  a  state  of  nature.  Their  market  value 
may  be  more  than  that  of  the  land  itself.  An  interest- 
ing question  is  that  of  timber,  and  one's  understand- 
ing of  it  is  a  good  test  of  his  grasp  of  the  relation 
of  land  to  improvements.  In  a  new  and  heavily- 
wooded  country  the  removal  of  timber  is  popularly 
regarded  as  an  improvement.  There  is  no  way  of  mak- 
ing a  farm  except  by  clearing  the  forest.  In  after 
years  the  timber  is  greatly  needed ;  the  land  would  be 
more  desirable  with  the  timber  on.  The  facts  are, 
that  timber  is  not  land,  but  timber.  It  is  always  a 
blunder  to  misname  anything.  Timber  is  not  land; 
but,  like  land,  is  one  of  the  Resources  of  Nature. 
Unlike  land,  it  is  consumed  in  the  using.  As  a  mine 
is  worked  out  and  exhausted,  so  a  forest  is  destroyed. 
A  new  settler  may  remove  the  timber  to  get  at  the 
land ;  but  the  simple  fact  is,  he  has  destroyed  the  tim- 
ber. When  there  is  abundance  of  it,  more  than  his 
generation  wants,  its  loss  will  not  be  felt ;  and  it  en- 
ables him  to  get  the  benefit  of  the  use  of  the  land. 
When  more  people  come,  the  timber  is  wanted  and,  if 
standing,  would  perhaps  be  worth  more  in  the  market 
than  the  land  from  which  it  was  taken. 

Improvements   on    agricultural   land,  in   the  main, 


42         RESOURCES    FOR    SATISFACTION    OF   WANTS. 

satisfy  wants  indirectly.  A  swamp  is  drained  in  or- 
der that  it  may  produce  better  crops.  Orchards  are 
planted,  not  for  the  trees,  but  for  the  fruit  they  are 
expected  to  produce.  Improvements  on  residence  and 
public  grounds,  on  the  contrary,  usually  satisfy  wants 
directly.  A  lawn  in  city  or  country  is  made  to 
please  the  eye.  Trees  are  planted,  not-  for  fruit,  but 
for  shade.  One  wants  the  lawn  and  the  trees  about 
his  dwelling.  So,  public  and  private  parks  are  im- 
provements on  land  which  satisfy  wants  directly. 

If  the  reader  will  stop  to  think  for  a  moment,  he 
will  see  how  large  a  portion  of  all  the  resources  pro- 
duced by  human  industry  is  included  in  these  four 
classes.  It  is  much  more  than  half.  If  we  were  to 
stop  our  classification  here,  we  should  find  the  arrang- 
ing of  the  greater  part  of  Produced  Resources  in 
these  four  classes,  of  inestimable  value  in  our  further 
study.  There  remain,  however  : 

5.  Finished  Goods  which  Satisfy  Wants  Directly. 
These  are  of  two  classes:  permanent,  and  those 
which  will  be  consumed  in  the  using.  Of  the  first, 
«re  articles  like  pictures  and  statuary.  It  is  true, 
they  will  not  last  forever,  but  thousands  of  people 
may  look  at  a  painting  without  injury  to  it.  These 
goods,  like  buildings,  satisfy  a  want  without  being  in- 
jured thereby.  We  can,  therefore,  afford  to  bestow 
great  labor  upon  them  ;  knowing  that  when  once  pro- 
duced, they  will  remain  for  a  long  period  to  satisfy 
w^nts,  perhaps  of  many  people  besides  the  owner. 
Some  of  this  class  of  goods,  of  which  household  fur- 
niture is  the  most  important  example,  have  only  a  low- 


PRODUCTIONS    OF    HUMAN    INDUSTRY.  43 

er  degree  of  permanency.  They  wear  out  with  use  ;. 
they  cease  to  satisfy  wants  because  of  changes  in 
style,  etc.  Nevertheless,  they  are  often  handed  down 
from  father  to  son,  or  more  often  from  mother  to 
daughter.  Few  people  expect  to  furnish  a  house 
anew  every  year ;  the  majority  of  people  regard  good 
furniture  as  purchased  to  last  for  many  years,  if  not 

for  a  lifetime. 

• 

The  second  class  of  finished  goods  is  those  that 
are  consumed  in  the  using.  The  most  important  of 
these  is  the  food  supply.  Clothing  is  not  absolutely 
destroyed  with  once  using,  but  is  practically  rendered 
worthless  for  the  use  of  any  other  person,  and  is  rap- 
idly worn  out. 

Some  goods  will  occur  to  the  reader  which  seem  to 
fall  into  one  of  these  two  divisions  as  readily  as  into 
the  other.  They  are  destroyed  in  the  using,  but  they 
last  for  a  considerable  time.  Since  a  year  is  the  nat- 
ural measure  of  the  production  of  goods,  those  which 
are  usually  replaced  year  by  year  should  always  be 
classed  as  consumable.  To  be  classed  as  permanent^ 
goods  should  be  capable  of  lasting,  under  favorable 
circumstances,  at  least  the  greater  part  of  a  lifetime. 
They  should  be  goods  which  one  does  not  expect  to  re- 
place as  he  does  the  clothing  he  wears  ;  they  should  be 
like  books  ;  while  one  may  intend  to  buy  other  books 
on  the  same  subject,  he  does  not  expect  to  replace  the 
same  book. 

6.  Materials  and  Goods  in  Process  of  Produc- 
tion. The  aim  of  all  production  is  to  satisfy  wants. 
Finished  products  may  be  buildings,  or  roads  or  tools. 


44         RESOURCES    FOR    SATISFACTION    OF   WANTS. 

designed  to  aid  in  producing  something  else  ;  but  the 
final  object  is  to  produce  something  which  will  satisfy 
wants,  directly.  Thus,  our  last  class  was  "  Finished 
goods  satisfying  wants  directly."  There  is  a  still  larger 
class  of  goods  in  the  process  of  production.  Many 
of  these  are  finished  so  far  as  one  producer  is  con- 
cerned. Wool  is  to  the  farmer  a  finished  product,  but 
it  does  not  satisfy  wants  in  this  condition.  Cloth  is 
considered  by  the  manufacturer  a  finished  product,  but 
it  is  really  only  a  material  for  further  production. 
Not  until  it  is  made  into  clothing  is  it  ready  to  satisfy 
wants.  The  quantity  of  materials,  and  goods  which 
are  destined  to  become  materials,  is  many  times  greater 
than  the  finished  products. 

Of  the  completed  products  of  human  industry,  sat- 
isfying wants  directly,  which  are  speedily  consumed  in 
the  using,  it  is  not  desirable  that  the  world  should 
have  a  large  stock  on  hand.  The  labor  of  preserving 
and  taking  care  of  these  products  for  even  one  year  is 
considerable.  Wants  change  with  the  fashions.  These 
commodities  can  be  produced  anew  every  year,  and  it 
is  necessary  only  to  have  a  stock  sufficient  to  last  from 
year  to  year,  and  to  guard  against  all  danger  of  fail- 
ure. Improved  land,  good  roads,  good  machinery,  and 
skilled  labor,  are  far  more  important  than  a  stock  of 
provisions  and  consumable  goods ;  always  assuming 
that  there  is  a  sufficient  amount  of  the  latter  to  last 
until  more  can  be  produced  by  ordinary  methods. 

Of  domestic  animals  some  will  become  food  mate- 
rial, and  some  are  used  like  machinery  in  the  work  of 
production. 


PRODUCTIONS    OF    HUMAN    INDUSTRY.  45 

The  productions  of  human  industry  will,  for  con- 
venience, frequently  be  called  Produced  Wealth.  The 
use  of  the  prefixes  Natural  and  Produced  will 
avoid  any  confusion  with  the  idea  of  wealth  as  the 
term  is  used  by  some  writers.  Both  Natural  and  Pro- 
duced Wealth  include  many  resources  not  covered  by 
the  term  wealth  as  used  by  those  who  define  it  by  the 
term  value.  It  is  not  the  intention  here  to  enter  into 
a  discussion  of  the  meaning  of  disputed  terms.  Let 
the  reader  attach  whatever  meaning  to  the  word 
"  Wealth  "  he  has  been  accustomed ;  but  regard  these 
as  two  new  terms,  which  are  here  defined.  Natural 
Wealth  is  the  Resources  of  Nature.  Produced  Wealth 
is  the  Resources  Produced  by  Human  Industry.  The 
question  of  value  does  not  enter  into  these  definitions. 


CHAPTER   IV. 

SOCIETY. 

The  fourth  resource  for  the  satisfaction  of  wants  is 
Society.  This  is  the  presence  and  companionship  of 
human  beings,  considered  apart  from  their  ability  to 
labor.  Robinson  Crusoe  led  a  dreary  life,  and  the  so- 
ciety of  even  his  man  Friday  was  appreciated.  Society 
includes  the  home ;  and,  in  addition  to  the  relations  of 
father,  mother,  wife,  brother,  sister,  the  presence  of 
companions,  neighbors  and  friends  satisfies  many  of 
the  noblest  wants  of  humanity.  The  drift  toward  the 
cities  is  partly  to  get  in  a  crowd,  to  see  and  associate 
with  more  people. 

The  mere  presence  of  human  beings  does  not  consti- 
tute society ;  it  does  not  necessarily  make  society  that 
satisfies  the  wants  of  others.  Many  of  the  produc- 
tions of  industry  are  only  rubbish  which  we  would  pay 
something  to  have  -removed.  So,  there  are  men  and 
women  who  are  a  curse  to  the  other  people  of  the 
earth.  Some  of  them  we  remove  to  work-houses  and 
prisons.  Society  may  be  at  fault  to  some  extent  for 
their  character — we  are  not  now  discussing  that  point — 
but,  as  they  are,  the  earth  would  be  better  off  without 
them.  Churches  and  missionary  societies  succeed  in 
reforming  many  of  them;  and  one  object  of  philan- 
thropic work  is  to  improve  the  character  of  the  disa- 
greeable and  wicked,  for  the  sake  of  others  as  well  as 

(46) 


SOCIETY.  47 

for  their  own  sake.  It  is  necessary  here  only  to  call 
attention  to  the  fact  that  not  all  human  beings  satisfy 
the  want  of  others  for  society. 

This  want,  indeed,  can  be  met  only  by  persons  with 
habits  and  tastes  to  some  extent  like  our  own.  Chi- 
nese may  be  society  for  Chinamen;  but  even  if  an 
American  desires  their  labor,  he  seldom  wisftes  their 
companionship ;  and  if  he  has  no  use  for  their  labor 
he  would  pay  something  to  have  them  removed  from 
his  neighborhood.  Social  circles  naturally  form  among 
people  of  the  same  race  and  nationality,  and  are  lim- 
ited to  those  whose  habits  are  very  similar. 

The  want  satisfied  by  society  is  so  real  that  it  is 
often  expressed  by  a  high  money  value.  A  residence 
lot  of  a  few  feet  front  sells  for  twenty  thousand  dol- 
lars, when  other  lots  equally  near  and  convenient  to 
the  business  center  of  the  same  city  can  be  had  for 
five  thousand.  They  are  equally  desirable  in  every  re- 
spect except  the  single  one  of  the  neighbors  who  live 
on  the  same  street  and  in  the  vicinity.  Fifteen  thou- 
sand dollars  is,  in  this  instance,  the  commercial  value 
of  the  society  of  a  particular  neighborhood. 

The  development  of  a  society  which  shall  better- 
satisfy  the  wants  of  its  members  is  as  legitimate  a 
subject  for  discussion  in  our  science  as  the  production* 
of  food  or  dwellings,  but  it  is  far  more  difficult. 

Society  Satisfies  Wants  Indirectly.  Society  satis- 
fies want  indirectly  by  affording  opportunity  for  the 
division  of  labor,  and  by  permitting  the  production  of 
goods  in  large  quantities. 

The  advantage  of  the  division  of  labor — a  technical 
4 


48         RESOURCES    FOR    SATISFACTION    OF   WANTS. 

phrase  made  popular  by  Adam  Smith — will  be  shown 
further  on.  Such  division,  by  which  each  one  does  a 
particular  kind  of  work,  is  possible  only  where  there  is 
a  considerable  number  of  people.  If  each  man  devotes 
his  entire  time  to  a  single  branch  of  labor,  the  num- 
ber of  workmen  must  be  very  large.  It  must  be 
much  larger  than  the  number  of  trades  and  branches 
of  trades,  since  in  order  that  one  man  may  work  all 
the  time  at  so  simple  a  thing  as  bending  piano  wires, 
hundreds  or  thousands  of  men  must  be  employed  in 
each  branch  of  the  more  common  trades. 

The  advantage  of  producing  goods  in  large  quanti- 
ties is  well  understood.  Cotton  prints  are  now  manu- 
factured at  a  cost  of  less  than  five  cents  a  yard  ;  if 
made  in  small  quantities,  they  could  not  be  produced 
at  a  cost  of  fifty  cents.  But  cotton  prints  can  not  be 
made  in  large  quantities  unless  there  is  a  large  num- 
"ber  of  people  to  use  them.  One  person  can  teach 
thirty  children  of  the  same  age  and  attainments  as 
well  as  she  could  teach  one,  perhaps  with  more  advan- 
tage to  each.  If  there  were  only  one  child  to  be 
taught,  the  labor  would  be  proportionately  thirty  times 
as  great. 

It  is  the  satisfaction  of  human  wants,  so  far  as  they 
can  be  satisfied  by  these  four  classes  of  Resources,  that 
forms  the  subject  of  this  volume.  That  is,  the  satisfac- 
tion of  wants  so  far  as  they  can  be  satisfied  by  the  Re- 
sources of  Nature,  Labor,  the  Productions  of  Human 
Industry,  and  Society,  or  the  presence  and  companion- 
ship of  human  beings. 


CHAPTER  V. 

UTILITY  OF  THE  RESOURCES. 

Utility  is  the  quality  of  an  object  which  makes  it 
useful,  or  fits  it  to  satisfy  human  wants.  Utility  re- 
sides in  the  object.  It  is  a  quality  of  the  object  and 
not  of  the  user.  The  quality  of  sweetness  which  is  in 
sugar  makes  it  useful  and  is  its  utility.  This  quality 
is  not  at  all  dependent  on  the  number  of  people  who 
use  it,  or  on  the  quantity  which  may  be  desired.  The 
popular  idea  of  utility  is  the  correct  one.  Iron,  wood, 
water,  air,  grain,  fruits — these  are  useful,  or  have 
utility.  All  Resources  for  the  Satisfaction  of  Wants 
possess  utility.  It  is  the  possession  of  this  quality 
that  makes  them  resources. 

It  is  to  be  regretted  that  Professor  Jevons,  in  his 
admirable  work,  "The  Theory  of  Political  Economy," 
uses  the  word  "Utility"  in  the  sense  of  "Value  in 
Use."  There  are  three  ideas  which  we  must  keep  dis- 
tinct— Utility,  Value  in  Use,  and  Value  in  Exchange. 
It  has  been  the  mistake  of  many  political  economists 
to  attempt  to  dispense  with  one  of  the  three,  whereas 
not  one  of  them  can  be  spared.  One  who  reads  Pro- 
fessor Jevons,  or  other  writers  who  have  followed  him, 
should  remember  that  by  "  Utility  "  he  means  precisely 
what  will  hereafter  be  denned  as  Value  in  Use  ;  and 
that  the  Utility  here  considered  is  an  entirely  different 
thing.  It  is  a  question  of  names,  not  of  ideas. 
(49) 


50        RESOURCES    FOR   SATISFACTION    OF   WANTS. 

It  should  be  noticed  that  an  article  may  have  the 
utility  of  satisfying  wants  directly,  as  food  and  cloth- 
ing ;  or  of  satisfying  them  indirectly,  as  the  plow  by 
which  the  farmer  fits  the  ground  for  a  crop. 

An  object  may  have  more  than  one  utility,  and  most 
objects  have.  Water,  for  example,  has  the  utility  of 
satisfying  thirst,  and  thus  of  preserving  life.  It  has 
a  lower  utility  of  cleansing,  and  a  still  lower  utility  of 
furnishing  the  means  of  navigation.  Objects  are  used 
for  their  highest  utility  first ;  and  when  they  are  suf- 
ficiently numerous  to  satisfy  the  more  important  wants,, 
lower  utilities  come  into  play.  If  one  had  an  allow- 
ance of  only  a  pint  of  water  per  day,  it  might  all  be- 
needed  for  quenching  thirst ;  but  where  water  is- 
abundant,  it  is  used  for  less  important  purposes. 
These  different  utilities  in  the  same  object  may  be  as 
distinct  as  different  utilities  in  different  objects.  New 
utilities  are  constantly  being  discovered,  sometimes  in 
objects  which  have  been  used  for  other  purposes,  and 
often  in  objects  heretofore  useless.  It  was  a  great 
step  forward  when  it  was  learned  that  anthracite  coal 
could  be  burned.  A  utility  of  what  seemed  a  black 
stone  was  discovered. 

The  utilities  of  many  objects  can  be  increased  by 
human  effort.  It  is  one  of  the  objects  of  labor  to  in- 
crease them.  The  knife-blade  has  a  higher  utility 
than  the  iron  ore  or  the  steel  from  which  it  was  made. 
Great  labor  has  been  put  forth  to  convert  the  steel 
into  knife-blades  ;  and  it  was  expended  solely  to  give 
more  utility  to  the  steel.  Gain  in  utility  is  always  a 
benefit  to  mankind,  because  it  increases  the  power  of 


UTILITY    OF   THE   RESOURCES.  51 

the  Resources  in  satisfying  human  wants.  The  greater 
the  utilities,  population  remaining  the  same,  the  better 
•can  wants  be  satisfied. 

1.  THE  UTILITIES  OF  THE  RESOURCES  OF  NATURE. 
— Strictly  speaking,  the  Utilities  of  the  Resources  of 
Nature  can  seldom  be  increased.  They  are  as  they 
were  created,  and  nearly  all  additions  to  them  are 
classed  as  Produced  Wealth.  The  ditch  which  drains 
the  swamp,  the  fences  and  buildings  put  upon  the  land 
by  man,  are  all  Produced  Wealth.  The  knife-blade 
itself  is  classed  as  Produced  Wealth. 

The  land,  the  air  and  the  water  remain  largely  as 
they  are  from  age  to  age.  To  some  slight  extent  they 
are  modified,  usually  more  to  their  damage  than  to 
their  improvement.  Air  may  be  vitiated  by  a  manu- 
facturing establishment,  and  its  utility  decreased.  A 
stream  of  water  may  be  polluted  by  the  drainage  of  the 
factory,  and  its  utility  for  drinking  purposes  destroyed. 
The  natural  fertility  of  land  may  be  exhausted,  and 
the  forms  of  consumable  natural  wealth,  such  as  coal 
;and  timber,  are  actually  destroyed  with  the  use,  and 
their  utility  is  gone.  On  the  other  hand,  the  atmos- 
phere is  sometimes  purified  by  the  drainage  of  the 
swamp,  but  this  is  a  comparatively  slight  change.  The 
general  principle  is  that  the  utility  of  Natural  Re- 
sources remains  much  the  same  from  century  to  cen- 
tury. 

There  has  been  a  continued  discovery  of  new  utili- 
ties of  the  Natural  Resources,  and  this  discovery  is 
sometimes  mistaken  for  an  increase  in  the  utility  of 
the  resources  themselves.  When  it  was  first  found 


52         RESOURCES    FOR    SATISFACTION    OF   WANTS. 

that  the  red  ore  could  be  smelted,  and  wrought  into 
iron  bars,  an  unsuspected  utility  in  this  seeming  stone 
was  discovered.  The  world  was  so  much  the  richer^ 
just  as  an  individual  would  be  who  should  discover  a 
buried  treasure  hidden  on  the  estate  he  had  inherited 
from  his  ancestors.  There  would  be  no  more  gold  in 
the  world  than  before,  but  he  discovered  that  which 
was  hidden.  There  have  been  many  discoveries  of 
new  utilities  in  well-known  objects.  When  it  was 
learned  that  water  could  be  converted  into  steam,  and 
the  steam  into  power,  the  world  was  so  much  the 
richer. 

2.  UTILITY  OF  PRODUCED  WEALTH. — The  utility 
of  Produced  Wealth,  on  the  contrary,  can  be  very 
greatly  increased.  Indeed,  this  is  the  main  object  of 
labor.  Take  a  bar  of  steel  and  convert  it  into  watch- 
springs  ;  the  utility  is  many  times  as  great.  Take 
lumber  and  brick,  and  build  them  into  a  dwelling  ; 
the  utility  is  far  greater  than  that  of  the  materials. 
The  wool  produced  by  the  farmer  is  manufactured, 
with  great  labor,  into  cloth  and  clothing.  Indeed,  the 
object  of  expending  labor  upon  materials  is  to  increase 
their  utility  ;  and  the  object  of  all  labor,  which  does- 
not  satisfy  wants  directly,  is  to  increase  the  utility  of 
some  part  of  Produced  Wealth. 

A  very  considerable  portion  of  Produced  Wealth 
consists  in  improvements  on  land,  which  may  seem  to 
be  an  increase  in  the  utility  of  Natural  Resources.  A 
swamp  is  drained,  and  the  waste  land  bears  a  Crop. 
Sometimes  Produced  Wealth  is  so  united  with  land  as- 
really  to  become  a  part  of  it,  in  which  case  the  utility 


UTILITY    OF   THE   RESOURCES.  53 

of  the  land  is  increased  by  human  labor.  It  is  usually 
much  better  to  treat  of  all  improvements  on  land  apart 
from  the  land.  They  may  be  destroyed,  but  the  land 
will  remain  forever. 

Minerals  and  timber  when  once  removed  from  the 
land  are  regarded  as  Produced  Wealth.  The  timber 
is  like  a  crop  which  can  be  grown  again  in  years ;  and 
while  minerals  can  not  be  replaced,  their  removal  from 
the  soil,  and  their  great  transformation,  make  it  neces- 
sary to  treat  them  as  Produced  Wealth.  We  need 
never  lose  sight  of  the  element  of  Natural  Wealth  in 
them. 

3.  UTILITY  OF  LABOR. — The  utility  of  labor  is 
its  power  to  satisfy  wants,  either  directly  or  indirectly. 
We  have  before  seen  that  great  difference  exists  in  the 
power  of  men  to  labor ;  that  the  services  of  some  men 
will  accomplish  a  hundred  times  as  much  as  those  of 
others ;  that  is,  they  possess  far  more  utility.  There 
are,  however,  many  utilities  of  labor.  Most  men  have 
the  power  of  doing  a  considerable  number  of  useful 
things.  Under  modern  civilization,  each  group  of 
men  learns  to  do  things  which  others  can  not  do ;  and 
they  acquire  skill,  which  makes  their  labor  many  times 
as  useful. 

The  utility  of  labor  can  be  very  greatly  increased. 
This  is  one  of  the  objects  of  education,  and  almost 
the  only  object  of  learning  a  trade,  or  acquiring  skill 
in  any  department.  It  would  doubtless  be  profitable 
to  the  world  to  give  even  more  attention  to  increasing 
the  utility  of  the  labor  of  the  rising  generation.  With 
more  general  education  and  better  training,  there  is 


54        RESOUKCES    FOR   SATISFACTION   OF   WANTS. 

no  reason  why  the  next  generation  might  not  be  able 
to  accomplish  much  more  than  the  present,  with  no 
more  exertion. 

4.  UTILITY  OF  SOCIETY. — It  is  one  of  the  dis- 
tinctive features  of  this  book  that  it  treats,  not  only 
of  the  subject  of  Economics  from  the  point  of  view 
of  human  wants,  and  of  the  resources  for  their  satis- 
faction, but  that  it  also  takes  account  of  Society  as 
one  of  the  great  resources  for  the  satisfaction  of  wants, 
equal  in  importance  to  that  of  labor  and  produced 
wealth.  As  soon  as  men  are  provided  with  the  lowest 
necessities  of  life,  the  desire  for  society  becomes  one 
of  the  strongest  of  all.  The  boy  thirsts  for  com- 
panionship. He  is  not  happy  unless  he  can  be  with 
other  boys.  The  condition  of  a  single  human  being 
on  an  island  is  the  most  pitiable  possible  to  conceive. 
From  the  lowest  conditions  of  life  to  the  highest,  so- 
ciety is  equally  desired  and  equally  important. 

The  utility  of  Society  must  be  carefully  distin- 
guished from  the  utility  of  Labor.  A  good  workman 
may  be  a  thief,  or  a  very  undesirable  companion.  A 
pleasant  companion  may  have  little  power  of  labor. 
Society  and  Labor  are  both  embodied  in  human  beings, 
but  have  nothing  else  in  common. 

As  the  utility  of  labor  can  be  greatly  increased  by 
the  education  or  training  of  the  workman,  the  business 
manager,  and  the  scientific  investigator,  so  the  utility 
of  society  can  be  greatly  increased  by  the  education  of 
the  people  in  morals  and  manners,  in  general  intel- 
ligence, and  in  all  that  goes  to  make  a  desirable  com- 
panion. 


UTILITY   OF  THE   RESOURCES.  55 

The  utility  of  some  parts  of  society  is  a  negative 
-quantity ;  so  much  less,  or  worse,  than  no  society.  It 
was  the  custom  of  England,  years  ago,  to  transport 
criminals  beyond  the  high  seas,  in  order  to  get  rid  of 
their  society.  Undoubtedly,  if  any  village,  and  espe- 
cially any  city  of  considerable  size,  could  be  free  from 
the  presence  of  a  certain  portion  of  its  people,  it  would 
be  a  much  more  desirable  place  to  live  in.  This  sort 
of  society  is  a  negative  quantity.  It  is  a  damage  to 
the  city  and  the  people  ;  and  the  world  would  be  better 
off  if  these  undesirable  persons  did  not  exist.  Oc- 
casionally undesirable  society  is  found  in  connection 
with  considerable  labor  power,  and  heartless  capitalists 
are  willing  to  inflict  any  sort  of  people  upon  a  nation, 
if  they  can  thereby  secure  labor  cheaper,  and  make 
some  money  out  of  it.  Such  employers  are  the  en- 
emies of  the  well-being  of  the  human  race. 

The  improvement  of  society,  that  is,  the  increase 
in  its  utility  for  the  satisfaction  of  wants,  consists  in 
eliminating  undesirable  elements,  and  in  preventing 
their  increase.  Most  of  the  recent  immigration,  how- 
ever much  it  may  add  to  the  labor  power  of  the  coun- 
try, introduces  very  undesirable  elements  of  society. 
This  is  the  practical  objection  to  the  Chinese.  While 
they  have  labor  power,  their  utility  for  the  purpose  of 
society  is  a  negative  quantity,  and  lowers  the  average 
utility  of  society  as  a  whole. 

Positive  efforts  for  the  increase  of  social  utilities  are 
those  of  the  churches  and  schools,  and  all  moral  in- 
fluences which  tend  to  make  men  better  companions. 
The  present  high  utility  of  American  society  is  very 


56        RESOURCES   FOR   SATISFACTION   OF  WANTS. 

largely  due  to  schools  and  churches,  although  inherited 
traits  count  for  a  great  deal.  Improvement  in  moral, 
intellectual,  and  social  character  is,  of  course,  to  be 
made  mainly  among  the  young.  A  proper  education 
of  the  children  of  any  country,  provided  it  were  free 
from  the  influence  of  immigration,  would,  in  a  few 
generations,  greatly  increase  the  utility  of  the  society 
of  the  nation.  Every  city  would  be  a  far  more  desir- 
able place  of  residence.  Contrast  life  in  a  convict 
colony  with  life  in  a  colony  composed  of  Christian 
people  !  Contrast  life  among  idiots,  the  stupid  and 
ignorant,  with  life  among  intelligent  and  well-informed 
persons  !  Contrast  life  among  the  Indians  with  the 
life  of  a  New  England  city  or  village  !  It  is  as  im- 
portant that  we  make  provision  for  desirable  society 
in  the  future  as  that  we  build  houses  and  factories. 


CHAPTER  VI. 

VALUE  IN  USE. 

Value  in  Use  depends  both  on  Utility  and  the  num- 
ber and  wants  of  the  people.  Nothing  can  have  value 
which  is  not  useful,  but  Value  in  Use  shows  how  scarce 
an  article  is.  So  long  as  there  are  more  objects  than 
the  people  can  possibly  use,  they  have  no  value ;  but 
when  the  number  of  people  increases,  so  that  articles  of 
any  kind  become  scarce,  this  scarcity  is  expressed  by 
Value  in  Use.  The  scarcer  they  become,  the  higher 
the  value. 

Value  in  Use  must  not  be  confused  with  Value  in 
Exchange.  Exchange  Value  is  merely  what  one  can 
get  for  a  thing  in  the  open  market.  There  will  be  no 
confusion  if  we  remember  that  Value  in  Use  is  what  a 
thing  is  worth  to  use ;  Value  in  Exchange  is  what  it  is 
worth  to  sell.  "  Exchange  "  will  be  the  subject  of  a 
subsequent  book,  and  Exchange  Value  will,  of  course, 
be  treated  in  that  place. 

Value  in  Use  is  the  scarcity  of  useful  things.  It 
shows  the  relation  between  useful  things  and  the  num- 
ber of  people  who  desire  them.  Value  always  means 
scarcity,  and  high  values  are  always  unfortunate  for 
the  world.  Let  a  traveler  in  the  desert  be  perishing 
with  thirst ;  an  allowance  of  a  quart  of  water  per  day 
would  have  the  value  of  life  to  him.  Water  ordina- 
rily has  no  value,  because  it  is  abundant.  One  of  its 
(57) 


58        RESOURCES   FOR    SATISFACTION    OF   WANTS. 

utilities  is  that  of  preserving  life,  and  when  it  becomes 
sufficiently  scarce  its  value  is  equal  to  this  utility.  A 
gallon  of  water  per  day  would  have  a  higher  value  to 
this  traveler  than  a  single  quart,  but  not  greatly 
higher.  The  quart  preserves  his  life.  A  gallon  is 
convenient  for  cooling  his  face  and  hands,  a  minor  con- 
sideration. A  hogshead  of  water  per  day  might  have 
but  little  more  value  than  a  gallon,  since  a  gallon 
would  be  all  he  could  use.  Where  he  has  a  hogshead 
per  day,  one  quart  is  practically  nothing,  because  he 
can  spare  any  particular  quart  and  still  have  more  than 
he  needs.  If  there  were  all  the  wheat  that  the 
world  could  use,  its  value  would  be  much  less  than  at 
present,  and  more  people  would  be  able  to  use  wheat 
as  an  article  of  food  instead  of  some  cheaper  grain. 
A  high  value  shows  great  scarcity ;  that  there  is  in- 
sufficient for  the  satisfaction  of  all  wants.  No  values 
mean  abundance.  High  values  mean  scarcity. 

The  popular  notion  that  high  values  are  desirable 
arises  from  the  fact  that  each  man  desires  a  high  Ex- 
change Value  for  what  he  has  to  sell,  in  order  that  he 
may  get  as  much  of  other  things  in  return  as  possible. 
Value  in  Use  is  what  a  thing  is  worth  to  use.  Value  in 
Exchange  is  what  it  is  worth  to  sell.  Now,  if  one  has 
something  to  sell,  the  higher  its  value,  the  more  of 
other  goods  can  he  get  for  it.  Hence,  each  man  de- 
sires that  the  value  of  his  own  possessions  be  as  high 
as  possible,  but  he  also  desires  that  the  value  of  all 
other  things  which  he  has  to  buy  be  as  low  as  possible. 
The  things  he  has  to  sell  can  only  have  a  high  value 
when  they  are  scarce.  A  large  crop  lowers  the  price 


VALUE   IN   USE.  59 

of  grain  ;  large  production  reduces  the  value  of  goods, 
sometimes  almost  to  nothing.  It  is  certainly  to  the  in- 
terests of  the  world  that  goods  be  plenty.  It  would 
be  fortunate  for  us  if  many  other  necessities  of  life 
were  as  plenty  as  the  air  and  water,  which,  although 
they  possess  the  highest  Utility,  seldom  have  any  Val- 
ue at  all,  simply  because  they  are  abundant. 

It  is  not  easy  for  us  to  get  this  idea  firmly  in  our 
minds,  that  Value  means  scarcity;  that  is,  the  scar- 
city of  useful  things.  Their  Value  in  Use  shows  how 
scarce  they  are.  Neither  must  we  forget  that  the*  dif- 
ference between  Value  in  Use  and  Value  in  Exchange 
is  that  one  is  what  a  thing  is  worth  to  use,  and  the 
other  is  what  it  is  worth  to  sell,  or  what  one  can  get 
for  it.  An  article  may  have  a  very  high  Value  in  Use 
to  a  particular  person,  though  he  could  get  nothing  for 
it  in  the  market.  The  Value  in  Exchange  is  nothing. 
So  a  horse  may  be  worth  nothing  to  a  man  to  use, 
since  he  has  no  use  for  him ;  yet  he  may  have  a  Value 
in  Exchange,  since  he  can  be  sold  for  something.  In- 
deed, it  is  when  the  Value  in  Exchange  is  higher  than 
the  Value  in  Use  of  the  article  that  exchange  takes 
place. 

Measure  of  Value  in  Use. — We  estimate  the  Value 
in  Use  of  any  particular  object  by  comparing  it  with 
some  other  with  which  we  are  more  familiar.  The 
Value  in  Use  is  the  satisfaction  which  the  object 
gives  to  the  user.  He  compares  this  satisfaction  with 
that  from  some  other  object.  He  says :  "  The  coat 
is  worth  more  to  me  than  the  picture,  seeing  that  in 
my  circumstances  it  satisfies  my  wants  better."  In 


60        RESOURCES   FOR    SATISFACTION    OF   WANTS. 

common  language  we  are  continually  comparing  the 
wants  of  things  in  this  way.  "  This  is  worth  more  to 
me  than  that ;  we  would  rather  have  this  than  a  dozen 
of  the  other." 

An  Average  Value  in  Use. — It  will  readily  be  seen 
that  the  Value  in  Use  of  an  object  to  one  person  is 
sometimes  a  hundred  times  as  great  as  to  another  ; 
perhaps  because  the  first  has  all  he  wants  of  it,  and 
the  second  has  none.  Its  average  Value,  in  Use  be- 
comes the  basis  of  Value  in  Exchange,  and  will  be  con- 
sid!ered  farther  on. 

Value  in  Use  Decreases  with  Quantity. — It  will 
also  be  seen  that  the  more  one  has  of  a  given  object  the 
less  its  value  becomes  to  him,  until,  when  he  has  more 
than  he  can  use,  the  value  of  any  particular  portion 
is  nothing.  One  suit  of  clothes  is  a  necessity,  and 
has  a  very  high  Value  in  Use.  A  second  is  a  conven- 
ience, but  has  a  much  lower  value,  since  one  can  very 
easily  get  along  without  it.  Ten  suits  have  more  value 
than  two,  but  very  little  more;  while,  perhaps,  a 
hundred  suits  of  clothing  would  have  no  more  Value 
in  Use  lo  most  men  than  ten,  since  ten  would  satisfy 
all  their  wants.  This  is  also  true  of  money,  which  re- 
presents all  purchasable  commodities.  It  is  not  true 
that  a  dollar  is  worth  as  much  to  one  man  as  to 
another.  To  the  laborer  in  a  city  who  receives  one 
dollar  per  day,  that  one  dollar  may  mean  support  of 
himself  and  his  family,  and  have  the  Value  in  Use  of 
life  itself,  or  of  life  out  of  the  poorhouse.  A  second  dol- 
lar per  day  has  also  a  very  high  value  to  him,  but  not 
so  much  as  the  first.  Ten  dollars  per  day  would  have 


VALUE    IN    USE.  61 

a  still  higher  value,  since  it  would  enable  him  to  satisfy 
more  wants  ;  but  not  five  times  as  great  a  value  as  two 
dollars  per  day  since  the  wants  satisfied  by  the  ad- 
ditional eight  dollars  are  by  no  means  to  be  compared 
with  those  supplied  from  the  first  two.  To  one  whose 
income  is  a  hundred  dollars  per  day,  an  addition  of  a 
single  dollar  would  have  very  little  Value  in  Use, 
since  the  additional  wants  which  it  would  enable  him 
to  supply  would  be  of  small  consequence.  Compare 
the  additional  wants  which  that  dollar  would  supply 
with  the  food  and  clothing  of  the  man  who  receives 
but  one  dollar  a  day.  The  greater  one's  income,  there- 
fore, the  less  is  a  dollar  worth  to  him.  That  is,  the 
Value  in  Use  of  money,  after  one  has  a  certain  in- 
come, decreases  very  rapidly. 


BOOK  II. 

POPULATION. 


BOOK  n. 

POPULATION— THE   NUMBER    OF    PEOPLE    WHOSE 
WANTS  ARE  TO  BE  SATISFIED. 

INTRODUCTION  — The  Relation  of  Wants  to  Resources  is 

Shown  by  Value  in  Use, 65 

CHAPTER      I.     POPULATION    AND    THE    RESOURCES     OF 

NATURE, 66 

CHAPTER    II.     POPULATION  AND  LABOR, 87 

CHAPTER  III.     POPULATION  AND  PRODUCED  WEALTH,  .         96 
•CHAPTER  IV.     POPULATION  AND  SOCIETY, 103 

CHAPTER    V.     THE  LAW  OF  THE  INCREASE  OF  POPULA- 
TION,             116 

CHAPTER  VI.     APPLICATIONS   OF  THE  LAW  OF  THE  IN- 
CREASE OF  POPULATION, 135 


BOOK  II. 

POPULATION: 

THE    NUMBER   OF   PEOPLE  WHOSE  WANTS 
ARE  TO  BE  SATISFIED. 

It  is  obvious  that  the  absolute  extent  of  the  Re- 
sources for  the  Satisfaction  of  Wants  is  of  less  import- 
ance than  their  relative  extent,  when  compared  with 
the  population.  A  million  dollars  is  a  large  fortune 
for  a  single  family ;  it  divides  into  ten  smaller  fortunes 
for  ten  families.  If  divided  among  a  hundred  families, 
they  have  ten  thousand  each.  If  there  are  a  thousand 
families,  it  means  only  one  thousand  for  each ;  if  the 
families  number  ten  thousand,  the  million  becomes  only 
a,  hundred  dollars  for  each.  The  satisfaction  of  the 
wants  of  the  people  depends"  not  so  much  on  the  abso- 
lute wealth  of  a  country  as  on  its  wealth  relative  to 
the  number  of  people. 

The  relation  between  Wants  and  Resources  shows 
itself  in  Value  in  Use.  In  the  last  chapter,  we  saw 
that  Value  in  Use  always  means  scarcity  of  useful 
things ;  the  scarcer  an  article,  the  higher  the  value. 
But  articles  become  scarce  through  increase  in  the 
number  of  the  people,  as  well  as  by  the  diminution  of 
the  goods.  Value  hi  Use  shows  the  relation  between 
Wants  and  Resources. 

(65) 


CHAPTER  I. 

POPULATION  AND  THE  RESOURCES  OF  NATURE. 

It  is  obvious  that  the  Resources  of  Nature  can  not 
be  increased.  Man  has  had  nothing  to  do  with  creat- 
ing them,  and  as  they  were  in  the  beginning  so  will 
they  remain,  except  so  far  as  Nature,  by  earthquakes, 
by  upheavals,  and  the  wearing  down  of  the  land  by 
wind  and  rain,  and  the  action  of  her  own  powers, 
changes .  them.  Land,  in  the  sense  used  in  Political 
Economy,  is  nothing  but  the  extension  of  the  earth's 
surface,  and  the  earth's  surface  can  not  be  increased. 
The  atmosphere  remains  the  same,  contaminated  and 
purified  by  Nature's  chemical  laws.  The  water  is  lifted 
from  the  ocean's  surface  and  blown  over  mountain  and 
prairie,  to  be  carried  by  the  rivers  back  to  the  sea ; 
but  the  volume  of  water  on  the  earth's  surface  remains 
the  same.  The  forces  of  Nature  act  continually ;  gravi- 
tation has  pulled  with  the  same  power  since  man  ap- 
peared, and  will  doubtless  continue  the  same  as  long 
as  the  world  shall  exist.  A  few  of  the  less  important 
Resources  of  Nature,  such  as  timber  and  wild  animals, 
may  be  destroyed;  but  no  increase  of  Nature's  re- 
sources comes  with  increase  in  population. 

Let  no  one  suppose,  however,  that  increase  of  popu- 
lation necessarily  means  less  of  the  Resources  of  Nature 
for  each  one,  because  there  is  enough  for  a  vast  multi- 
tude. One  can  drink  as  much  from  a  pitcher  as  from 

(66) 


POPULATION    AND   THE   RESOURCES    OF    NATURE.       67 

•a  fountain.  A  mountain  spring  which  feeds  a  river 
may  supply  a  hundred  families  as  well  as  one.  If 
there  are  few  people  living  by  it,  the  immigration  of 
several  more  does  not  mean  less  water  for  each.  The 
newcomers  use  what  before  was  unused.  In  an  earlier 
day,  an  emigrant  settled  on  a  vast  prairie,  and  could 
use  but  a  small  portion  of  the  land  about  him.  He 
welcomed  neighbors  who  would  take  a  claim  next  his 
own.  He  had  all  the  land  he  wanted;  and  there 
was  plenty  for  others.  The  newcomers  took  from  him 
no  Resources  of  Nature,  and  added  to  his  resources 
that  of  Society. 

The  earth  was  made  for  a  great  population.  It  is 
to  be  subdued  and  filled  with  people.  It  may  be  filled, 
however,  or  any  particular  country  may  be  filled,  so 
that  all  the  Resources  of  Nature  are  in  use  by  some 
one.  The  population  about  the  spring  may  be  so  great 
that  there  is  not  water  enough  for  all ;  and  can  be  sup- 
plied only  by  bringing  it  from  afar,  either  by  hand 
with  great  labor,  or  by  elaborate  works  of  engineering, 
at  great  expense.  The  prairie  may  become  so  thickly 
settled  that  when  the  farmer's  sons  want  a  farm,  they 
must  be  content  with  a  few  acres,  where  their  father 
had  hundreds.  There  is  no  more  land  in  a  State  with 
ten  million  people  than  when  there  were  only  ten 
thousand. 

The  Resources  of  Nature  do  not  increase  with  the 
population.  They  seem  unlimited  so  long  as  there  is 
more  than  can  be  used  ;  the  pressure  begins  to  be  felt 
as  soon  as  all  the  land  is  occupied.  It  is  a  very  slight 
pressure  at  first,  and  increases  as  the  Resources  of 


68  POPULATION. 

Nature  appear  scarce,  and  become  more  valuable  with 
the  increase  of  population. 

DISCOVERY. — While  the  Resources  of  Nature  are  no 
greater  now  than  when  man  appeared  on  the  earth, 
they  were  not  all  discovered  at  once.  To  the  ancients, 
all  beyond  the  sea  was  boundless  speculation.  Little 
by  little,  and  again  by  great  leaps,  man  has  pressed  on 
to  see  what  treasures  nature  had  for  him.  He  discov- 
ered America.  He  sailed  around  the  globe.  He 
pressed  far  up  into  the  frozen  latitudes  of  the  North. 
He  has  crossed  the  dark  continent,  and  penetrated  into 
darkest  Africa.  There  is  not  much  more  for  him  to 
discover  in  the  way  of  mere  extension  of  the  earth's 
surface. 

It  is  not  so  with  the  Forces  of  Nature.  Here,  in- 
deed, great  discoveries  have  been  made.  The  last  few 
years  have  been  a  great  period  of  discovery  in  the 
methods  of  using  power  by  means  of  electricity.  We 
realize  now,  as  our  fathers  did  not,  something  of  the 
magnitude  of  the  power  stored  up  in  nature  which  be- 
longs to  man  to  use.  There  is  no  reason  to  believe 
that  discoveries  on  this  line  are  at  an  end. 

There  is  much  mineral  wealth  yet  undiscovered. 
The  world  is  waiting  for  a  cheap  method  of  producing 
aluminum  from  common  clay.  No  one  knows  whether 
such  cheap  extraction  is  possible.  If  it  is,  another  re-, 
source  of  nature  may  be  made  available. 

We  must  distinguish  sharply  between  discovery  and 
production.  The  land  of  the  world  exists,  whether 
civilized  man  has  explored  it  or  not.  Minerals  are 
buried  in  its  depths,  whether  he  has  staked  out  his. 


POPULATION    AND   THE   EESOURCES    OF   NATURE.       69 

mines  or  not.  Natural  gas  filled  the  porous  rock  and 
sand  a  hundred  years  ago,  as  truly  as  when  it  was 
reached  by  the  first  drill.  The  laws  which  govern  the 
use  of  electricity  were  the  same  a  thousand  years  ago. 

When  it  is  said,  therefore,  that  the  Kesources  of 
Nature  can  not  be  increased,  it  does  not  follow  that 
provision  may  not  be  made  for  supplying  the  wants  of 
more  people.  Natural  Resources  may  be  discovered, 
and  we  can  never  tell  when  we  have  completed  our  dis- 
coveries. The  wealth  of  nature  is  great :  how  great 
we  do  not  know.  It  is  certainly  far  greater  than  any 
one  hi  the  last  century  imagined. 

A  very  considerable  portion  of  the  labor  of  the  world 
is  now  engaged  in  discovery,  rather  than  in  production. 
He  who  finds  more  of  nature's  wealth,  and  makes  it 
available  to  mankind,  renders  a  service  as  truly  as  he 
who  produces  a  machine  from  the  crude  iron. 

A  LIMIT  TO  NATURAL  RESOURCES. — It  is  evident 
that,  notwithstanding  discovery,  there  must  be  a  limit 
to  Natural  Resources,  though  we  can  not  with  certainty 
say  where  that  limit  is.  We  know  what  we  have  ; 
each  new  discovery  shows  that  there  has  always  been 
something  we  did  not  see  ;  but  discovery  is  limited  to 
what  there  is  to  discover.  When  Columbus  touched 
land  in  the  Western  hemisphere  no  one  knew  what 
might  be  found  beyond  the  coast  line.  We  know  now 
that  we  have  reached  the  limit ;  that  we  have  found,  in 
outline,  all  the  land  there  is  to  find  outside  the  frozen 
zones.  The  limit  to  discovery  was  the  land  that 
actually  existed.  No  explorer  can  find  what  is  not 
there.  The  discovery  of  the  forces  of  nature  must 


70  POPULATION. 

be  limited  to  the  forces  that  exist.     We  simply  find 
what  is. 

How  MANY  PEOPLE  WILL  THE  RESOURCES  OF  NA- 
TURE SUPPORT  WITH  COMFORT  ? —  Quantity  of  Land 
Required  for  Residence  Purposes. — Land  is  used 
for  three  purposes  :  residence,  manufacturing  and  com- 
merce, and  agriculture.  It  might  seem  to  the  savage 
that  there  could  never  be  so  many  people  in  the  world 
as  to  make  the  land  required  for  mere  residence  a  mat- 
ter of  any  consequence.  But  not  only  is  the  acreage 
used  for  residence  very  considerable  when  each  has  all 
he  wants,  but  the  most  desirable  residence  land  is  ex- 
tremely limited.  A  rough  measure  of  the  land  desired 
for  residence  is  the  common  village  lot.  In  cities  few 
families  are  able  to  afford  the  land  they  need.  In  the 
country  village,  where  land  is  comparatively  cheap,  so 
that  a  little,  more  or  less,  does  not  greatly  add  to  the 
cost  of  a  home,  we  are  likely  to  find  the  average  man 
using  all  the  land  he  wants.  The  most  common  size  of 
lots  in  such  villages  is  four  rods  by  eight  (66  x  132 
feet),  including,  to  the  center  of  the  street  in  front,  one- 
fourth  of  an  acre.  Many  residents  desire  acre  lots.  The 
amount  of  land  one  desires  in  a  well-regulated  village 
is  limited  by  the  annual  expense  of  maintaining  walks 
and  streets  in  front,  lighting  streets,  etc.,  and  of  keep- 
ing his  own  ground  in  proper  order.  One  such  lot  is 
all  that  the  majority  of  people  wish  to  take  care  of.  If 
we  accept  this  common  village  lot  as  a  standard,  allow 
something  for  cross  streets,  park,  and  grounds  for 
school  and  other  public  buildings,  and  something  for 
ihe  few  families  who  desire  larger  grounds,  sometimes 


POPULATION   AND   THE   RESOURCES   OF  NATURE.      71 

iive  or  ten  acres,  we  shall  have,  in  round  numbers,  two 
thousand  residences  to  the  square  mile.  This  is  a  con- 
venient, practical  estimate  of  the  amount  of  land  de- 
,sired  for  residence  purposes  by  the  majority  of  the 
people,  if  it  costs  nothing.  Smaller  lots  than  these 
bring  people  closer  together  than  most  of  them  desire 
io  live.  Larger  lots  put  neighbors  farther  away  than 
many  desire,  and  add  to  the  expense  of  maintenance  of 
the  ground  and  streets.  It  is  to  be  remembered  that 
this  measure  is  not  assumed  ;  it  is  the  one  found  in 
existence  in  thousands  of  villages.  It  is  certain  that 
the  average  family  desires  more,  rather  than  less,  land 
than  this. 

Two  thousand  residences  to  the  square  mile  means  a 
population  of  ten  thousand  people.  Where  more  than 
this  live  within  a  square  mile,  the  land  is  overcrowded 
for  the  highest  welfare  of  all.  In  cities  there  are  fre- 
quently more  than  ten  times  this  number — people 
packed  tier  above  tier,  ten  stories  high ;  but  even  when 
supplied  with  all  modern  conveniences,  they  lack  the 
ground,  sunlight,  and  the  air.  How  desirable  is  a  lit- 
tle land  about  a  residence  in  a  great  city,  is  shown  by 
the  price  that  wealth  pays  for  it.  Grounds  about  a 
dwelling  become  a  luxury  which  only  the  rich  can  af- 
ford. The  wants  of  those  who  are  deprived  of  them 
can  not  be  said  to  be  satisfied.  The  horrible  condi- 
tion of  the  tenement  houses  of  the  poor  in  the  large 
€ities  has  been  so  often  described  that  the  description 
need  not  be  repeated.  Something  of  this  is  due  to 
the  habits  of  the  inmates,  something  to  poorly  con- 
structed buildings ;  but  more  to  the  lack  of  land.  A 


72  POPULATION. 

little  ground  about  a  dwelling  is  a  great  sanitary  meas- 
ure, even  for  those  who  care  nothing  for  sanitary  laws. 
One  of  the  problems  of  the  modern  philanthropist  is 
to  break  up  the  population  of  the  densest  portion  of 
the  cities,  and  scatter  the  people  over  a  wide  extent  of 
country. 

When  a  residence  district  is  overcrowded,  the  election 
of  buildings  becomes  more  costly.  A  two-story  house 
in  a  village  can  be  built  at  a  comparatively  low  cost. 
Where  buildings  are  ten  stories  high,  foundations  must 
be  deep  and  massive,  and  walls  heavy.  They  must  be 
nearly  fire-proof,  to  prevent  the  d?,nger  of  a  whole 
city  being  swept  away  in  a  night.  When  buildings- 
are  low  and  isolated,  they  cost  comparatively  little ; 
and  the  space  between  them,  of  itself,  affords  protec- 
tion against  an  extensive  fire. 

In  a  densely  populated  residence  district,  the  desire^ 
for  land  can  never  be  perfectly  supplied,  and  the  lim- 
ited satisfaction  is  had  at  greatly  increased  cost. 

In  round  numbers,  then,  we  may  say  that  ten  thou- 
sand people  per  square  mile  is  the  limit  for  the  simple 
purpose  of  residence,  where  the  desire  for  residence 
land  is  satisfied.  For  other  reasons,  people  may  prefer 
to  live  where  the  population  is  a  hundred  thousand  per 
square  mile,  but  at  a  sacrifice  of  the  desire  and  need  of 
land.  In  the  Jewish  quarter  of  New  York  the  popu- 
lation is  estimated  at  330,000  to  the  square  mile.  The 
most  densely  populated  portion  of  London  has  170,- 
000  to  the  square  mile.  It  is  to  be  remembered,  also, 
that  the  entire  country  can  not  be  built  over  in  this 
way.  A  city  implies  great  stretches  of  land  or  water 


POPULATION    AND    THE   RESOURCES    OF   NATURE.       73 

beyond,  separating  it  from  other  cities.  It  is  because 
of  the  free  air  in  this  open  country  around,  that  the 
densely  populated  city  is  rendered  habitable. 

On  the  other  hand,  where  the  limit  of  overpopula- 
tion is  not  passed,  a  certain  density  of  population  is 
of  great  advantage.  The  anxiety  of  a  new  country 
for  settlers  is  due  in  part  to  land  speculators,  but  it 
is  also  caused  by  a  popular  appreciation  of  the  fact 
that  the  presence  of  a  considerable  number  of  the 
right  sort  of  people  is  a  mutual  advantage.  Nearly 
all  of  these  advantages  are  obtained  long  before  over- 
crowding begins.  A  good  public  school  has  seven  or 
eight  grades  below  the  high  school.  The  course  in  the 
latter  is  three  or  four  years,  making  from  ten  to  twelve 
distmct  classes  from  the  beginning  to  the  end.  These 
classes  can  be  taught  to  much  better  advantage  when 
separated.  In  order  that  there  may  be  pupils  for 
classes  in  the  higher  grades,  there  must  be  enough  for 
two  or  three  schools  in  the  lower — at  least  five  hundred 
pupils  in  all ;  and  seven  or  eight  hundred  could  be 
taught  more  economically.  Since  more  than  one- 
fourth  of  the  entire  population  is  of  school  age,  schools 
with  five  hundred  pupils  mean  only  a  total  population 
of  two  thousand,  if  all  persons  between  the  ages  of  six 
and  eighteen  are  in  school,  as  they  should  be.  In  a  high 
school  the  classes  should  not  be  as  large  as  in  the  low- 
er grades,  and  one  hundred  scholars  are  sufficient  for 
a  four  years'  course.  The  number  of  persons  between 
the  ages  of  fourteen  and  eighteen,  fifteen  and  nine- 
teen, or  sixteen  and  twenty — a  period  of  four  years — is 
£>out  seven  per  cent  of  the  entire  population.  Villages 


74  POPULATION. 

of  two  thousand  will  have,  on  an  average,  one  hundred 
and  forty  persons  who  should  be  in  a  high  school.  A 
population  of  two  thousand  is  required  to  sustain  good 
schools  economically.  Unfortunately,  most  pupils  are 
compelled  to  leave  school  at  an  earlier  age,  so  that  a 
somewhat  larger  population  is  now  required  to  sustain 
a  good  high  school  in  an  economical  way.  We  may 
hope  that  the  day  will  come,  when  it  will  be  the  excep- 
tion that  any  one  leaves  school  under  eighteen  or 
twenty  years  of  age. 

With  the  diverse  religious  views  of  the  people  of  the 
United  States,  several  churches  are  likely  to  be  main- 
tained in  each  village  or  city.  Any  minister  prefers  to 
preach  to  a  congregation  of  three  hundred,  rather  than 
less.  It  is  pretty  well  agreed  among  the  clergy  that  it 
is  better  that  a  church  consist  of  at  least  four  or  five 
hundred  members.  Some  hold  that  larger  churches 
should  be  divided,  but  no  one  would  place  the  desira- 
ble limit  below  three  hundred.  To  gather  churches  of 
this  size,  of  even  four  religious  denominations,  means 
at  least  four  or  five  thousand  people. 

There  is  reason  to  believe  that  the  fuel  of  the  fu- 
ture, in  towns  large  enough  to  sustain  a  plant,  will  be 
gas.  Rock  gas  has  shown  us  how  convenient  such 
fuel  is.  It  is  freely  stated  in  many  cities  that  if  the 
supply  of  natural  gas  were  to  fail,  the  pipes  would  be 
utilized  for  the  distribution  of  manufactured  gas  for 
fuel.  The  experiment  of  fuel  gas  for  dwellings  is  sure 
to  be  attempted.  To  make  its  success  possible,  there 
must  be  a  considerable  population.  Coal-gas  works 
€an  not  be  erected  and  maintained  for  a  few  families. 


POPULATION    AND    THE   RESOURCES    OF   NATURE.       75- 

What  is  true  of  gas  is  also  true  of  water  works.  Gas 
and  water,  distributed  under  pressure,  are  now  among 
the  common  conveniences  of  modern  life.  Neither  can 
be  had  in  a  hamlet. 

The  necessity  of  a  considerable  number  of  people 
for  the  maintenance  of  shops,  stores,  and  the  thousand 
conveniences  of  a  city,  is  apparent  to  all.  To  say  just 
where  the  line  lies  between  the  greatest  convenience 
and  overcrowded  territory  is,  of  course,  impossible. 
The  largest  city  has  some  advantages  over  the  next- 
smaller.  It  must  not  be  forgotten  that  many  of  these 
advantages  belong  to  it  simply  because  it  is  larger 
than  others.  The  best  of  everything  is  likely  to 
drift  to  the  metropolis.  If  it  were  not  half  as  large, 
the  best  would  still  be  there,  so  long  as  there  was  no 
larger  place.  Oliver  Wendell  Holmes  thought  the 
jealousy  of  the  country  village  was  because  the  city 
drained  it  of  its  best  men.  It  is  not  the  absolute,  but 
the  relative  size,  that  determines  where  the  best  men 
of  any  calling  go,  and  there  can  be  but  one  largest. 

In  round  numbers,  we  may  say  that  a  city  of  five 
thousand  intelligent  people,  of  the  same  race  and  gen- 
eral methods  of  living,  make  possible  nearly  all  the 
substantial  advantages  which  come  from  the  massing 
of  population.  As  good  public  schools  may  be  main- 
tained as  are  found  in  the  largest  city,  at  far  less  ex- 
pense and  risk.  Churches  of  the  more  prominent  de- 
nominations can  be  well  maintained.  Gas  and  water 
works  can  be  economically  operated.  Merchants  will 
not  be  able  to  keep  as  large  a  variety  of  some  lines  of 
goods,  as  if  there  were  more  people  to  sell  to,  but  with 


76  POPULATION. 

all  the  more  common  goods  they  can  supply  their  cus- 
tomers as  well  as  any  city.  We  have  assumed  an  in- 
telligent American  white  population.  Cities  differ 
greatly  in  this  respect,  and  there  are  many  places  of 
ten  thousand  inhabitants  which  do  not  afford  the  ad- 
vantages to  be  found  in  others  of  five  thousand.  It  is 
evident  that  here,  as  elsewhere,  the  greatest  advantage 
is  found  in  the  "  golden  mean,"  where  population  is 
neither  too  sparse  nor  too  dense. 

Only  a  small  part  of  the  land  of  this  nation  is  new 
required  for  residence  purposes ;  but  the  scarcity  is  no 
less  real  because  confined  to  cities  and  towns.  Some 
land  is  not  well  suited  for  residences.  Some  is  much 
more  desirable  than  other  on  account  of  natural  loca- 
tion. The  desire  to  live  in  cities  is  not  alone  on  ac- 
count of  the  crowd ;  it  is  because  of  the  factories  and 
the  opportunity  of  obtaining  employment.  The  scar- 
city of  residence  land  in  the  city  may  be  caused  by 
artificial  means ;  yet  with  certain  methods  of  factory 
production  it  is  necessary  to  bring  large  numbers  of 
people  together  during  the  day.  They  must  live  some- 
where, and  the  natural  limits  of  residence  land  must 
be  taken  into  account.  The  production  of  goods  may 
be  carried  on  with  less  labor  in  a  densely  populated 
place  ;  but,  on  account  of  the  scarcity  of  land  in  that 
vicinity,  the  cost  of  satisfying  the  wants  of  the  labor- 
ers is  far  greater.  Rapid  and  cheap  transportation, 
by  which  persons  are  carried  miles  away  from  their 
work  at  the  close  of  the  day,  is  some  relief.  A  better 
provision  is  the  moving  of  factories  to  the  country. 

Land  Required  for  Factories  and 


POPULATION    AND   THE   RESOURCES    OF   NATURE.       11 

The  quantity  of  the  best  land  for  factories  and  com- 
merce is  very  limited.  In  a  new  country  there  may 
be  water-power  enough  for  all  mills  and  factories.  As 
population  increases,  the  best  mill-sites  are  soon  taken. 
Where  there  are  but  few  people,  there  is  plenty  of 
room  in  the  best  harbors  for  all  ships  which  visit  their 
'Coast.  As  the  people  multiply,  the  best  wharf -groun  d 
is  taken ;  and  that  must  be  very  poor  which  can  be 
had  for  nothing.  Later,  any  land  which  can  be  made 
available,  even  with  great  expense  for  improvement, 
commands  a  high  price.  All  this  shows  that  certain 
kinds  of  land,  land  suitable  for  manufacturing  and 
commercial  purposes,  becomes  scarcer  as  population  in- 
creases. People  must  use  inferior  sites,  or  improve 
other  sites  at  greater  cost.  They  must  do  with  less 
room  than  is  desirable.  It  is  not  as  easy  to  estimate 
the  actual  amount  of  land  needed  for  manufacturing 
and  commerce  as  for  residence.  The  needed  acreage 
is  not  great,  but  the  acres  fitted  for  the  purpose  are 
few.  There  are  few  harbors  on  the  sea  coast,  and  the 
wharf  lines  are  limited.  Up  to  a  certain  limit  the 
pressure  is  scarcely  felt.  When  that  limit  is  passed, 
a  larger  population  may  be  of  advantage  in  some  re- 
spects ;  but,  for  this  purpose,  it  means  proportionally 
less  for  the  people,  with  great  danger  of  monopoly  by 
the  few. 

Land  Required  for  Agriculture.  —  The  larger 
portion  of  the  land  in  civilized  countries  is  used  for 
agriculture.  The  Indian  wants  thousands  of  acres  to 
roam  over.  In  Great  Britain,  a  considerable  portion 
of  the  country  is  enclosed  in  parks  for  hunting  and 


78  POPULATION. 

private  pleasure,  showing  the  desire  for  great  pleasure- 
grounds.  This  fact  indicates  that  in  the  future  there 
may  be  more  great  public  parks  for  the  people ;  and> 
for  many  reasons,  a  larger  part  of  the  land  than  is 
now  devoted  to  that  purpose,  in  the  older  parts  of  the 
United  States,  might  well  be  maintained  in  park  or 
forest,  for  the  good  of  all.  No  doubt  a  fair  satisfac- 
tion of  the  better  wants  of  mankind  would  consider- 
ably reduce  the  acreage  of  land  now  used  for  agri- 
culture. Nevertheless,  the  price  of  agricultural  land 
shows  the  scarcity  of  the  more  desirable  portions.  Al- 
though the  atmosphere  is  essential  to  life,  it  brings  na 
price,  because  there  is  more  of  it  than  can  be  used.  For 
the  same  reason,  land  is  often  sold  in  new  countries 
for  less  than  the  cost  of  surveying ;  because  there  is  so 
much  land,  and  so  few  people.  In  European  countries, 
it  sells  for  what  seems,  to  an  American  farmer,  an  ex- 
travagant figure ;  because  there  is  so  little  land,  and  so 
many  people.  The  Western  ranchman  likes  to  meas- 
ure his  ranch  in  square  miles;  the  Western  farmer 
thinks  a  hundred  and  sixty  acres  a  moderate  farm. 
There  are  more  people  as  we  travel  from  the  West  to- 
the  East,  with  less  land  for  each.  Within  a  certain 
limit  higher  culture  produces  more,  with  less  labor, 
from  the  smaller  farm.  After  this  limit  is  passed^ 
although  the  amount  of  produce  from  an  acre  can  still 
be  increased,  it  is  with  greater  proportional  labor,  so 
that  the  laborer  gets  less  than  before.  This  is  the 
origin  of  the  famous  phrase,  "diminishing  returns." 

DIMINISHING  RETURNS. — Diminishing  returns  doesr 
not  mean  a  smaller  return  from  land,  but  a  smaller  re 


POPULATION   AND    THE   RESOURCES    OF   NATURE.       79 

turn  from  labor ;  not  a  smaller  return  from  labor  in 
factories,  but  a  smaller  return  from  labor  on  land. 

The  Western  cattle  king,  now  passing  away,  valued 
land  very  lightly.  One  of  them,  perhaps,  owns  some 
hundreds  of  acres  by  the  streams,  and  has  the  title  tova 
strip  which  shuts  others  out  of  a  considerable  region  be- 
yond. He  may  have  used  Government  land,  pasturing 
his  herds  in  common  with  the  other  kings,  branding 
the  calves  at  the  annual  "round-up,"  and  enforcing 
the  property  right  of  his  brand  with  his  Winchester 
rifle,  and  a  band  of  determined  cowboys.  Not  that 
he  often  had  to  fight  for  his  rights.  There  was  a 
mutual  understanding  that  they  were  to  be  respected. 
The  returns  to  labor  were  enormous ;  the  returns  from 
an  acre  of  land,  very  small.  A  dozen  men  could  tend 
a  great  herd  of  cattle  that  pastured  on  thousands  of 
acres  of  land.  Great  fortunes  were  made  by  the 
owner ;  which,  even  if  divided  equally  among  all  the 
men  employed,  would  have  given  each  one  several 
times  the  compensation  he  could  have  earned  in  the 
older  States.  It  is  not  surprising  that  such  cattle  kings 
resisted  the  opening  of  the  country  to  settlement  in 
farms  of  one  hundred  and  sixty  acres. 

The  hundred-and-sixty-acre  farmer,  however,  gets  a 
large  return  from  his  labor  compared  with  the  five-acre 
farmer.  He  does  not  cultivate  his  land  so  well,  but  he 
cultivates  more  of  it  with  less  labor,  and  the  total  re- 
turn to  him  is  far  greater.  Illinois  has  a  reputation 
as  a  great  corn  State,  but  the  average  yield  of  corn 
per  acre  in  Illinois  is  less  than  in  Ohio.  There  are 
more  acres  planted.  The  Illinois  farmer  plants  a  field 
6 


80  POPULATION. 

of  forty  or  eighty  acres,  does  most  of  the  work  by 
two-horse  machinery,  and  gets  a  large  crop  for  the 
labor  bestowed.  The  Ohio  farmer  plants  perhaps  ten 
acres  to  the  other's  forty,  bestows  as  much  labor  on  a 
ten-acre  field  as  an  Illinois  farmer  on  forty  acres,  and 
gets  more  corn  to  the  acre,  but  not  four  times  as 
much.  He  does  not  get  as  many  bushels  for  each 
day's  work.  If  one  asks  why  he  does  not  plant  more 
acres,  the  obvious  reply  is  that  he  has  no  more  acres 
to  plant.  The  price  of  land  is  so  much  higher  than 
in  Illinois  that  he  can  not  afford  to  buy  more.  There 
are  more  people,  more  farmers,  with  less  land  for  each. 

To  the  English  farmer  it  is  a  surprise  to  see  land  in 
Ohio  cultivated  so  poorly.  American  farming  appears 
slovenly.  The  reply  is,  it  pays  better  to  work  more 
land  than  to  give  the  high  English  culture.  The 
American  farmer  gets  a  greater  return  for  his  labor, 
but  not  so  much  from  an  acre  of  land. 

It  is  a  sort  of  stock  argument  with  some  that  we 
ought  to  cultivate  our  land  better.  Part  of  the  ap- 
parent force  of  this  statement  lies  in  the  pride  of  a 
nice  farm.  A  farmer  owes  it  to  his  neighbors  to  keep 
his  farm  in  good  order,  and  to  keep  down  unsightly 
weeds,  whether  it  pays  or  not.  It  is  also  true  that, 
up  to  a  certain  limit,  more  labor,  better  cultivation, 
pays.  If  the  average  production  of  wheat  be  fifteen 
bushels  per  acre,  it  is  possible  that  if  one  will  bestow 
twice  the  labor,  and  double  the  cost  of  fertilizers,  etc., 
he  can  get  thirty  bushels.  That  is,  without  regard  to 
the  price  of  his  land,  by  doubling  the  cost  of  production 
he  can  double  the  product.  But  how  is  it,  after  he 


POPULATION    AND    THE   RESOURCES    OF   NATURE.       81 

Teaches  the  thirty-bushel  product  ?  If  he  now  doubles 
the  labor  on  a  single  acre,  will  he  get  sixty  bushels  ? 
If  so,  would  again  doubling  the  labor  on  an  acre  bring 
&  hundred  and  twenty  bushels  ?  Every  farmer  can 
tell  the  foolishness  of  such  an  attempt.  He  will  point 
to  a  slovenly  farmer,  who  gets  half  a  crop  ;  and  say 
that  if  that  man  would  work  twice  as  hard  he  would 
get  twice  as  much  off  his  land ;  but  when  one  has  al- 
ready brought  his  land  up  to  a  certain  state  of  cultiva- 
tion, which,  in  this  country,  is  called  good  farming,  it 
is  impossible  to  get  increased  returns  in  proportion  to 
the  increase  of  labor  and  cost.  Every  good  farmer 
knows  that  more  work  will  bring  better  crops,  but  not 
in  proportion.  Doubling  the  labor  and  expense  may 
increase  the  crops  twenty-five  or  fifty  per  cent.;  but  it 
is  more  profitable  to  work  more  land. 

So  much  effort  has  been  made  to  break  the  force  of 
this  obvious  truth — as  certain  as  the  axioms  of  geom- 
etry— that  we  can  afford  to  look  at  it  from  another 
point  of  view.  A  good  American  farmer  who  owns 
one  hundred  and  sixty  acres  of  land  is  visited  by  three 
Englishmen,  who  tell  him  that  he  does  not  work  land 
as  they  do  in  England,  and  that  it  would  pay  him  to 
cultivate  it  better.  They  propose  that  he  divide  his 
farm  among  the  four ;  he  to  retain  the  forty  acres  with 
dwelling  house  and  buildings,  and  to  give  them  forty 
acres  of  bare  land  apiece.  Say  they :  "  Now,  you  just 
put  as  much  labor  and  capital  on  this  forty  acres  as 
you  have  on  the  one  hundred  and  sixty,  and  you  will 
make  as  much  money,  and  we  will  all  have  a  farm 
apiece."  An  American  farmer  would  not  be  caught 


82  POPULATION. 

with  this  chaff.  He  knows  he  could  get  more  off  any 
forty  acres  of  his  farm,  but  not  four  times  as  much. 
If  he  is  a  good  farmer,  he  has  cultivated  his  land 
nearly  up  to  the  point  of  diminishing  returns  ;  that 
is,  additional  labor  and  capital  applied  to  his  land  will 
not  bring  as  great  a'  return  as  that  now  bestowed.  It 
would  pay  him  better  to  work  more  land,  provided  the 
additional  land  could  be  had  for  nothing. 

Whenever  an  accurate  calculation  shows  that  it  will 
pay  better  to  cultivate  additional  land,  rent  free,  than 
to  put  more  work  on  that  under  cultivation,  the  point 
of  diminishing  returns  has  been  reached. 

The  limits  of  diminishing  returns  may  be  reached 
in  one  country,  but  not  in  another ;  in  one  State,  but 
not  in  the  entire  United  States.  The  only  thing  that 
is  sure  is,  that  there  is  a  limit  to  the  returns  to  labor 
on  agricultural  land.  When  it  is  passed,  land  is  be- 
coming scarce  in  proportion  to  the  population.  It  may 
support  twice  the  present  number  of  people,  but  at  an 
increased  cost  of  labor.  A  point  would  be  reached — 
has  been  reached  in  many  countries  of  the  world— 
where  the  average  man  must  be  content  with  less  food, 
or  poorer  food  and  clothing,  than  if  there  were  fewer 
people  for  the  land  to  support.  Like  Lot  and  Abra- 
ham, the  land  is  not  able  to  bear  them.  The  remedy 
at  that  time  was  emigration.  It  is  the  remedy  which 
the  Old  World  is  trying,  in  shipping  t9  us  its  surplus 
population. 

Calling  a  Farm  by  Some  Other  Name. — The 
last  attempt  to  break  the  logic  of  the  law  of  diminish- 
ing returns  is  to  call  a  farm  a  factory.  There  are 


POPULATION   AND   THE   RESOURCES    OF   NATURE.       83 

some  people  who  take  great  delight  in  calling  a  thing 
by  some  other  name,  with  the  idea  that  the  change  of 
name  will  change  the  thing.  The  object  in  calling  a 
farm  a  factory  is  to  assume  that  agricultural  produce 
-can  be  manufactured  like  cotton  cloth,  at  less  expense 
for  large  quantities  than  for  small.  The  suggestion 
is  to  use  fertilizers  of  the  highest  strength,  containing 
the  elements  of  the  crop  to  be  raised.  One  Frenchman 
proposes  to  warm  the  soil  by  buried  steam-pipes,  and 
to  transform  the  whole  land  into  a  reeking  swamp  of 
the  torrid  zone.  The  answer  is  that,  even  if  the  law 
of  diminishing  returns  did  not  apply  here,  as  it  does, 
there  is  a  limit  to  the  power  of  the  air  and  the  sun- 
light. We  may  have  a  few  city  hotbed  vegetable  gar- 
dens, because  of  the  wide  expanse  of  country  between. 
The  air  sweeps  over  the  prairie  and  the  farm,  and  its 
volume  is  sufficient  to  purify  the  city,  and  for  the 
hotbed  garden.  There  is  a  limit  to  the  amount  of  con- 
centrated fertilizers,  and  decaying  vegetable  and  ani- 
mal matter,  that  may  with  impunity  be  heaped  on  a 
given  space  of  ground,  and  transformed  into  vegeta- 
tion. The  experiment  of  sewage  farms  has  been  tried 
as  a  means  of  disposing  of  the  sewage  of  cities ;  the 
growth  of  vegetation  is  rank  and  unfit  for  human  food ; 
where  it  has  been  fed  to  cows,  there  have  been  serious 
doubts  of  the  wholesomeness  of  their  milk.  It  is  a 
good  way  of  disposing  of  the  sewage  of  a  city,  but  it 
would  be  most .  unfortunate  if  the  whole  country  were 
transformed  into  one  vast  sewage  farm.  Great  spaces 
of  clear,  open  country  are  needed  for  the  sake  of 
•densely  populated  cities — spaces  occupied  by  ordinary 


84  POPULATION. 

| 

farms,  with  nature's  methods  of  production,  not  forced 
much  beyond  that  of  the  English  agriculture. 

It  is  impossible,  however,  to  increase  the  production 
of  land,  even  by  the  most  artificial  means,  beyond  cer- 
tain limits,  without  increasing  the  cost  of  production. 
It  is  impossible  to  get  rid  of  the  law  of  diminishing 
returns.  There  is  a  limit  to  the  number  of  bushels  of 
wheat  that  can  be  raised  to  the  acre,  even  though  the 
ground  be  heated  by  steam-pipes,  and  overcharged 
with  fertilizers,  until  the  grain  is  unfit  for  use.  When 
the  limit  is  reached,  the  wheat  will  be  produced  at  ten. 
times  the  cost  to  a  Dakota  farmer. 

All  improvements  in  agriculture  are  to  be  welcomed. 
The  limitations  imposed  are  found  in  the  extent  of  the 
earth's  surface,  the  air,  the  sunlight,  and  the  natural 
forces.  The  earth  might  have  been  larger  than  it  is. 
The  extent  of  land  might  have  been  greater,  and  that 
of  water  less ;  but  we  have  only  so  many  square  miles,, 
only  so  many  acres,  in  a  given  division.  The  earth  is 
large  enough  for  vast  multitudes,  for  numbers  of  which 
no  man  can  form  a  vivid  conception ;  but  it  would  be 
foolish  to  shut  our  eyes  to  the  limits  of  the  land  and 
its  productive  capacity. 

The  consideration  of  the  law  of  diminishing  returns 
has  been  a  little  tedious  to  the  reader,  yet  it  was 
scarcely  possible  to  make  it  shorter  or  simpler.  With- 
out an  understanding  of  it,  we  should  make  great  mis- 
takes. Ignorance  of  this  natural  law  has  permitted 
many  intelligent  men  to  fall  into  laughable  absurdities. 

VALUE  IN  USE  OF  THE  KESOURCES  OF  NATURE.— 
The  Value  in  Use  of  land  is  determined  by  the  num- 


POPULATION   AND   THE   RESOURCES    OF   NATURE.       85 

ber  and  character  and  condition  of  the  people  who  de- 
sire to  use  it,  or  on  whom  its  use  depends.  The  land 
on  which  the  city  of  Chicago  stands  was  a  few  years 
ago  worthless  because  there  was  nobody  to  use  it. 
There  was  a  vast  unoccupied  territory  to  the  west  of  it. 
There  were  a  few  settlers,  but  the  land  had  no  value, 
because  value  means  scarcity.  As  soon  as  this  Western 
land  was  occupied,  there  was  need  of  a  commercial 
metropolis,  and  the  natural  place  for  this  is  a  harbor 
on  the  lake.  The  site  of  Chicago  now  comes  into  use 
because  of  the  people  west  of  it.  Very  little  value  is 
given  to  any  particular  city  lot  by  the  improvements 
on  that  lot  itself.  The  value  comes  from  the  people 
who  live  on  other  land  about  it.  Improvements  on  one 
lot  give  value  to  others  in  the  neighborhood,  because 
they  ensure  a  large  and  better  population. 

The  value  of  land  is  not  determined  alone  by  the 
population  immediately  about  it,  but  often  by  that 
thousands  of  miles  distant.  The  value  of  land  in  the 
Dakotas  is  influenced  by  the  number  and  character  of 
the  people  in  London.  Dakota  land  has  the  utility  of 
producing  wheat,  but  would  have  no  more  value  than 
water  unless  there  were  people  to  eat  that  wheat.  The^ 
population  of  the  British  isles  thus  increases  the  value-- 
of  land  in  Dakota.  Were  there  fewer  people  in  Eng- 
land, or  were  they  unable  to  afford  wheat  as  an  article- 
of  diet,  there  would  be  no  foreign  demand.  With  the 
present  state  of  commerce,  the  value  of  land  is  often 
affected  by  the  population  of  very  distant  places,  and 
by  the  convenience  of  communication  and  transporta- 
tion. Land  is  no  longer  scarce  or  plenty  with  sole, 


86  POPULATION. 

reference  to  the  people  in  the  immediate  neighborhood. 
It  may  be  scarce  with  reference  to  those  who  draw  their 
supplies  from  it  half  way  round  the  globe.  The  value 
of  the  land  suitable  for  raising  tea  in  India  and  China 
and  Japan,  will  be  affected  by  the  number  of  people 
in  the  entire  earth,  and  by  their  tastes ;  that  is,  their 
wants.  The  question  is  not,  Is  such  land  scarce  with 
reference  to  the  people  in  India  ?  but,  Is  it  scarce  with 
reference  to  the  people  of  the  earth  ?  The  value  of  any 
given  piece  of  land  is  the  scarcity  of  that  kind  of  land, 
or  of  land  which  people  like  as  well  as  this  ;  and  its 
scarcity  is  caused  by  the  number  of  people  who  want 
it.  Utility  of  land  remaining  the  same,  it  becomes 
valuable  in  proportion  to  its  scarcity,  and  its  scarcity 
is  increased  with  the  number  of  people  dependent  on 
it,  and  with  the  development  of  their  wants. 

VALUE  OF  OTHER  NATURAL  KESOURCES. — Fortu- 
nately, most  of  these  are  so  plenty  as  to  have  no  value, 
either  in  use  or  exchange,  except  under  unusual  cir- 
cumstances. In  the  well-known  story  of  the  Black 
Hole  in  Calcutta,  there  was  not  air  enough  for  all  the 
prisoners ;  and  those  who  got  the  little  there  was  lived, 
while  the  others  died.  The  utility  of  air  was  no  greater 
than  before,  but  its  scarcity  gave  it  the  value  in  use  of 
life  itself.  The  atmosphere  is  often  injured  by  the  ex- 
halations from  swamps,  or  the  products  of  factories. 
Here  pure  air,  if  it  could  be  furnished,  would  have  a 
Value  in  Use. 

Wild  animals,  timber,  and  other  useful  natural  ob- 
jects, may  become  valuable  as  population  increases, 
through  their  scarcity. 


CHAPTER  H. 

POPULATION  AND  LABOR 

The  Resource  of  Labor,  or  rather  of  the  ability  to 
perform  labor,  differs  from  the  Resources  of  Nature 
in  almost  every  respect.  It  is  embodied  in  the  people 
whose  wants  are  to  be  satisfied.  One  of  the  mistakes 
of  the  orthodox  English  school  of  political  economy, 
which  has  done  so  much  for  the  science,  is  in  consider- 
ing Labor  too  much  as  a  machine,  or  as  something  apart 
from  the  people.  It  was,  of  course,  assumed  that  the 
laborer  must  eat  and  be  clothed,  but  the  steam-engine 
must  also  be  supplied  with  coal,  and  there  was  an  un- 
conscious tendency  to  treat  of  the  laborer  as  if  he 
were  an  engine  rather  than  a  man.  This  tendency 
was  not  because  of  any  heartlessness  on  the  part  of 
the  investigators,  many  of  whom  would  have  given 
their  own  lives  for  the  welfare  of  humanity ;  but  was 
rather  the  result  of  incorrect  methods  of  study,  and  a 
mistake  in  the  definition  of  the  subject  on  which  they 
wrote.  We  are  to  keep  in  mind  the  fact  that  we  are 
dealing  with  men  —  men  with  wants  and  power  to 
labor,  both  embodied  in  the  same  individual.  We  can 
not  separate  the  laborer  from  the  man  whose  wants  are 
to  be  satisfied.  We  may  consider,  now  his  power  to 
labor,  and  again  his  wants  as  man ;  but  in  each  case 
we  are  to  remember  the  other. 

The  resource  of  Labor  differs  from  the  Natural  Re- 
(87) 


88  POPULATION. 

sources  in  that  it  can  be  increased.  We  see  that  there 
is  no  more  land  in  the  world  to-day,  no  more  air,  water, 
or  minerals,  than  there  were  thousands  of  years  ago. 
There  will  be  no  more  thousands  of  years  hence.  The 
extent  of  the  Resources  of  Nature  is  entirely  unaf- 
fected by  the  increase  of  population.  But  the  in- 
crease of  population  is  likely  to  bring  more  laborers 
into  the  field.  The  more  people,  the  more  there  are 
to  work ;  and  there  is  no  reason  why  the  ability  to 
labor  should  not  keep  pace  with  the  increase  of  popu- 
lation. If  the  islands  of  Great  Britain  were  so  full 
that  there  was  not  room  enough  in  all  the  land  for  a 
house  for  each  family,  there  would  be  great  scarcity  of 
Natural  Resources  (in  fact,  people  would  die  off  long 
before  that  point  was  reached),  but  there  need  be  na 
scarcity  of  labor.  Labor  would  be  a  drug  in  the 
market ;  there  would  be  more  of  it  than  could  by  any 
possibility  be  used.  Land,  air,  sunlight,  water,  the 
products  of  the  soil — all  these  would  be  at  a  premium. 
We  are  always  to  guard  against  the  mistaken  notion 
that  any  one  resource  is  sufficient  for  the  satisfaction 
of  wants.  To  Adam  Smith  belongs  the  glory  of 
bringing  into  clearer  light  the  importance  of  Labor,, 
and  it  has  since  been  the  basis  of  many  a  treatise  on 
Political  Economy.  But  any  system  of  economics 
built  on  Labor  alone  is  false,  because  Labor  alone  is 
useless.  So,  Natural  Resources  without  Labor  are 
useless.  Each  is  like  the  half  of  a  pair  of  shears — 
they  must  be  riveted  together. 

But  because  the  ability  to  labor  may  be  expected  to- 
increase  with   the    increase    of   population,  it   by  no- 


POPULATION    AND    LABOE.  89* 

means  follows  that  it  always  does  so.  The  ability  of 
any  nation  to  labor  is  never  in  proportion  to  the  num- 
ber of  its  people.  It  is  the  sort  of  men,  rather  than 
the  number  of  men,  which  determines  the  power  of  a 
nation.  If  the  reader  will  recall  what  was  said  in  an 
earlier  chapter,  he  will  at  once  see  how  little  the  num- 
ber of  people,  and  how  much  the  character  of  the 
people,  has  to  do  with  determining  a  nation's  ability 
to  do.  It  is  not  so  much  the  mere  muscular  power  as 
the  vital  energy,  which  determines  its  use.  Even  in 
this  respect,  a  good  American  workman  is  worth  five 
or  ten  times  as  much  as  the  men  of  many  nations  of 
the  earth  ;  but  in  intellectual  power,  the  power  of 
adapting  means  to  ends,  power  of  inventing,  ability 
to  use  the  Resources  of  Nature,  he  may  be  worth 
hundreds  or  thousands  of  indolent  Africans. 

We  may  imagine,  therefore,  the  population  of  a 
country  to  remain  stationary,  as  does  that  of  France^ 
and  the  power  of  labor  to  increase  with  great  rapidity, 
perhaps  to  be  multiplied  many  tunes  during  a  single 
generation.  Let  us  suppose  a  few  hundred  thousand 
people,  for  convenience,  isolated  on  an  island.  They 
are  people  of  the  average  ability  of  those  in  the 
United  States,  and  are  living  as  we  do  here.  Let  it 
be  agreed  that  every  boy  and  girl  shall  receive  the  best 
training  and  education  that  can  be  had  from  the  most 
competent  instructors  in  the  little  nation.  There  are 
manual  training  schools,  apprenticeship  in  various 
trades  under  the  workmen  most  competent  to  teach, 
intellectual  culture — in  short,  all  is  done  that  can  be 
done  for  the  development,  education,  mental,  physical,. 


90  POPULATION. 

and  technical  training  of  each  child  in  the  State.  Who 
can  doubt  that  the  ability  of  the  second  generation  to 
labor  would  be  double  that  of  the  first,  though  its 
numbers  should  be  exactly  the  same  ?  There  would  be 
some  increase  in  the  average  physical  ability,  in  mus- 
cular power  and  vital  energy;  but  this  would  be 
of  little  consequence  compared  with  the  general  and 
technical  knowledge — the  knowing  how.  Even  the 
latter  would  be  small  in  comparison  with  the  enormous 
power  of  invention  which  would  follow  so  general  edu- 
cation, by  means  of  which  the  Resources  of  Nature 
would  be  used  to  better  advantage,  and  results  accom- 
plished beyond  the  power  of  any  number  of  ignorant 
though  muscular  men.  Labor  is  something  more  than 
muscular  exertion.  Some  one  has  said  that  it  consists 
in  moving  things.  It  would  be  nearer  the  truth  to  say 
it  consists  in  moving  things  to  the  right  place.  Know- 
ing what  is  the  right  place,  and  the  method  of  moving 
with  the  least  exertion,  is  the  greatest  part  of  it.  On 
the  other  hand,  the  population  might  be  doubled  by 
the  immigration  of  Poles  or  Italians,  but  the  power  of 
labor  would  not  be  proportionally  increased. 

It  is  not  alone  the  efficiency  of  the  laborers,  but 
the  proportion  of  laborers  to  idlers,  that  must  be  taken 
into  account.  In  some  nations,  at  some  times,  labor 
has  been  counted  a  disgrace.  The  citizen  lived  for 
war,  the  hunt  and  chase.  Even  at  the  present  day,  in 
European  countries,  there  is  a  class  of  wealthy  men 
who  do  little  toward  the  satisfaction  of  wants,  and 
procure  the  services  of  others,  by  inherited  fortunes. 
Even  in  this  country,  we  sometimes  hear  it  regretted 


POPULATION    AND    LABOK.  91 

that  there  is  no  leisure  class ;  that  is,  no  idle  class. 
This  is  partly  because  we  are  a  new  country,  and  pop- 
ulation is  not  yet  too  dense.  There  is  still  among  us 
a  respect  for  the  man  who  works  by  hand  or  brain. 
Our  most  honored  citizens  have  been  great  lawyers, 
great  physicians,  great  preachers,  and  men  who  have 
conducted  large  business  enterprises.  In  England, 
the  most  learned  physician  and  the  most  successful 
business  man  are  held  to  occupy  a  position  decidedly 
inferior  to  that  of  an  idling  nobleman,  living  on  the  in- 
heritance of  the  past  or  debts  contracted  in  the  pres- 
ent. There  is  a  decided  tendency  in  this  country 
toward  the  same  condition  of  affairs;  but,  neverthe- 
less, a  larger  proportion  of  our  people  are  engaged  in 
some  form  of  active  employment  than  in  any  other 
nation  in  the  world. 

The  power  of  labor  in  a  nation,  other  things  being 
equal,  is  greatest  when  the  largest  number  of  people 
work.  The  power  of  labor  in  a  new  country,  such  as 
a  newly  settled  State  in  the  West,  is  likely  to  be 
greater  than  in  an  older  country,  because  a  larger  pro- 
portion of  the  people  are  actively  employed.  Many  of 
the  brightest  and  most  intelligent  young  men  go  West. 
The  older,  and  those  unable  to  endure  hardships,  are 
more  likely  to  remain  at  home.  A  population  com- 
posed entirely  of  men  and  women  between  the  ages  of 
twenty  and  fifty,  in  vigorous  health,  with  high  physi- 
cal and  mental  powers,  would  have  abundance  of  la- 
bor ;  perhaps  two  or  three  hours  a  day  would  be  suffi- 
cient to  secure  to  all  a  fairly  comfortable  living. 

With  a  population  of  which  one-third  are  children, 


92  POPULATION. 

a  considerable  portion  aged,  a  large  number  sick  or 
feeble,  some  intellectually  incapable  of  making  labor 
effective,  and  a  certain  percentage  who  refuse  to  work 
because  possessed  of  sufficient  property  to  employ  oth- 
ers as  servants — we  have  the  effective  working  force 
greatly  reduced,  and  consequently  more  hours  of  la- 
bor are  required. 

The  relation  of  population  to  labor  may  be  summed 
up  by  saying :  Labor  naturally  increases  or  decreases 
with  the  population,  but  depends  on  the  physical  and 
mental  ability  of  the  people,  and  the  proportion  of  the 
entire  population  which  is  engaged  in  active  work. 

The  ability  of  a  nation  to  labor  should  increase 
much  faster  than  the  population,  because  of  the  better 
education  and  technical  training  of  each  new  genera- 
tion, and  the  experience  it  has  gained  from  the  past. 
The  time  will  undoubtedly  come  when  we  shall  consid- 
er the  first  twenty  years  of  life  as  sacredly  set  apart 
to  education  ;  when  public  opinion  will  not  tolerate  the 
support  of  parents  by  minor  children ;  when  the  State 
will  see  that  the  period  of  natural  growth  is  used  to  fit 
the  man  for  the  active  work  of  life.  Not  that  chil- 
dren will  do  no  work ;  but  only  so  much  as  is  an  aid  to 
education,  and  the  learning  of  a  trade  or  business. 

VALUE  OF  LABOR. — Labor  is  seldom  so  plenty  as 
to  have  no  value,  because  most  men  dislike  to  work. 
When  labor  has  no  value,  they  will  not  work,  and 
hence  the  labor  offered  becomes  scarce  enough  to  give 
it  a  value.  One  of  the  wants  we  have  to  satisfy  is 
that  of  a  desire  for  leisure,  and  the  satisfaction  of 
this  reduces  the  available  labor  power.  Hence,  labor 


POPULATION    AND   LABOR.  93 

that  can  be  had  for  nothing,  that  will  be  put  forth 
whether  the  man  gains  anything  or  not,  is  so  little 
that  it  is  very  scarce  as  compared  with  the  work  to  be 
-done.  If  there  were  so  many  men  who  preferred  work 
to  idleness  that  there  was  nothing  for  all  of  them  to 
-do,  labor  would  have  no  value  at  all,  though  the  utility 
would  be  the  same  as  at  present.  Such  instances  are 
•occasionally  found.  There  are  just  enough  of  such 
laborers  to  make  the  principle  clear.  There  are  a 
great  many  people  who  write  very  fair  poetry,  who 
find  so  much  pleasure  in  writing  it,  and  seeing  it  in 
print,  that  they  prefer  to  do  this  kind  of  work  to 
doing  nothing.  This  grade  of  poetry  has  a  certain 
utility.  A  limited  amount  of  it  is  printed  in  various 
newspapers,  but  the  work  possesses  no  value,  because 
it  is  not  scarce.  Poetry  of  a  higher  grade,  such  as 
Whittier  wrote,  is  scarce.  It  has,  of  course,  a  much 
higher  utility,  but  it  has  value  also,  because  of  its 
scarcity. 

Value  to  the  Laborer. — The  foregoing  has  reference 
io  the  value  of  the  results  accomplished,  but  there  is 
another  side,  which  is  the  laborer's  side.  It  is  the 
value  of  labor  to  him,  or  rather  the  value  of  freedom 
from  toil.  Certain  kinds  of  labor  are  disagreeable,  and 
would  be  done  by  no  one  if  it  were  not  to  satisfy  some 
want  of  his  own,  or  to  obtain  a  reward  from  others. 
Nearly  all  forms  of  labor  are  disagreeable  when  carried 
beyond  a  certain  number  of  hours  per  week ;  so  that 
the  laborer,  in  endeavoring  to  satisfy  his  own  wants, 
finds  that  one  of  those  wants  is  freedom  from  exer- 
tion. He  who  has  inherited  a  fortune  which  gives  him 


94  POPULATION. 

control  over  the  labor  of  others,  may  spend  his  time,, 
not  in  idleness,  but  in  systematic  pleasure-seeking.  If 
he  labors,  it  is  in  some  special  ways.  He  does  work 
which  he  enjoys,  or  labors  from  benevolent  motives 
in  order  to  benefit  others.  It  is  true  that  many 
wealthy  men  seek  to  increase  their  fortunes  for  vari- 
ous reasons,  among  them  the  mere  love  and  satisfac- 
tion of  increasing  them ;  but  the  labor  they  perform 
is  of  the  kind  they  enjoy,  although  it  may  not  seem 
desirable  to  others.  Most  men  work  more  than  they 
wish  to.  The  value  of  labor  is  precisely  the  value  of 
ease.  In  considering  whether  he  will  work  a  day  for 
a  certain  reward,  a  man  asks  himself  whether  he  pre- 
fers it  to  a  day  of  leisure.  Men  and  nations  differ 
greatly  in  this  respect.  Some  would  prefer  a  certain 
number  of  hours  of  labor  during  the  year  to  freedom 
from  toil.  They  are  conscious  that  work  is  good 
for  them,  that  they  are  better  off  with  a  reason- 
able amount  of  it  than  with  idleness.  The  English^ 
Americans,  and  Germans  are  types  of  laboring  na- 
tions ;  there  are  other  natural  loafing  nations,  such  as 
the  Turks,  native  Africans,  and,  in  general,  people  of 
lower  civilization.  They  love  idleness,  and  value  their 
leisure  very  highly.  They  must  have  sufficient  food  to 
prevent  starvation,  and  clothing  enough  for  bodily  pro- 
tection, and  will  therefore  work  a  little  to  preserve 
life ;  but  anything  further  seems  to  them  a  less  good 
than  ease.  Among  them  labor  has  a  very  high  value, 
because  there  is  so  little  of  it ;  their  laziness  makes  it 
very  scarce,  and  the  amount  of  work  performed  is  very 
small  in  proportion  to  their  needs. 


POPULATION    AND    LABOR.  95 

Labor,  from  the  point  of  view  of  the  laborer,  fol- 
lows the  same  law  as  other  values,  so  fully  illustrated 
before.  Its  clisagreeableness  increases  very  rapidly 
with  its  quantity. 

Value  in  Use  shows  the  relation  between  Wants  and 
Resources.  In  the  case  of  Labor,  value  shows  the  re- 
lation of  the  labor  power  of  the  population  to  the 
wants  of  the  population.  If  people  are  naturally  in- 
dolent, labor  power  is  small  in  proportion  to  wants, 
and  the  value  of  additional  hours  of  work  appears  to 
them  very  great.  On  the  other  hand,  their  labor 
power  may  be  far  in  excess  of  their  wants,  so  that 
they  would  willingly  assist  a  neighbor,  and  the  value 
of  labor  would  be  very  low.  The  value  of  labor  is 
probably  higher  among  civilized  nations  at  the  present 
time  than  ever  before,  because  of  the  great  increase  of 
wants ;  so  that  labor  is  actually  scarce  in  proportion 
to  the  wants  it  has  to  satisfy. 

The  actual  power  of  labor  should  be  raised  to  its 
highest  point  through  the  development  of  the  indi- 
vidual, and  the  increase  of  skill  and  knowledge.  The 
wants  of  the  people  should  not  increase  beyond  a 
point  which  will  require  reasonable  exertion  from  the 
great  mass  of  the  population.  We  may  assume  that 
it  is  desirable  that  men  should  have  great  skill  and 
knowledge,  and  great  labor  power,  and  that  wants, 
should  increase  to  the  point  which  will  demand  such 
laborers.  Such  a  race  of  men  will  certainly  rank  far 
above  those  whose  wants  are  fewer,  and  powers  o£ 
labor  less. 


CHAPTER  III. 

POPULATION  AND  PRODUCED  WEALTH. 

Produced  Wealth  has  no  such  relation  to  population 
as  has  Labor.  Labor  is  embodied  in  population  ;  Pro- 
duced Wealth  is  entirely  independent  of  the  number 
of  people.  It  may  increase  with  great  rapidity  when 
population  is  decreasing,  or  it  may  decrease  with  great 
rapidity  when  population  is  increasing. 

How  MUCH  PRODUCED  WEALTH  is  NEEDED? — 
As  with  Natural  Wealth,  it  is  well  to  inquire  how  much 
Produced  Wealth  is  needed  by  a  given  number  of  peo- 
ple. At  first  it  would  seem  that  there  could  not  be 
too  much  ;  but  it  is  evident  that  we  require  only  a  lim- 
ited quantity  of  various  classes  of  goods;  but  that 
-without  a  certain  quantity  of  these  goods,  proportional 
to  the  number  of  people,  either  want  or  great  suffer- 
ing must  result.  Indeed,  it  is  impossible  to  maintain 
;a  large  population  except  by  means  of  vast  accumula- 
tion of  Produced  Wealth. 

It  will  be  more  convenient  to  notice,  first,  that 
which  satisfies  wants  directly.  The  quantity  of  wheat 
which  can  be  eaten  in  a  single  year  is  limited ;  per- 
haps three  hundred  and  fifty  million  bushels  is  suffi- 
cient for  all  the  people  of  the  United  States.  Fortu- 
nately, this  grain  can  be  stored  and  carried  over  into 
the  next  year,  with  some  expense ;  but  there  is  no 
great  advantage  in  a  large  supply  at  the  beginning  of 

(96) 


POPULATION    AND    PRODUCED   WEALTH.  97 

harvest.  Fruit  has,  however,  often  been  suffered  to 
rot  on  the  ground,  because  there  was  more  than  the 
people  could  use.  The  quantity  of  clothing  required 
by  a  nation  is  also  limited.  There  is  no  great  advan- 
tage in  a  stock  sufficient  for  more  than  a  year ;  it  is 
better  that  it  be  produced  as  needed.  The  same  is 
true  of  dwellings.  One  or  two  houses  is  usually  all 
that  a  family  desires.  If  we  have  a  house  for  each 
family,  we  may  need  better  dwellings,  but  not  more. 

This  is  one  side.  On  the  other  hand,  if  there  is  too 
little  of  any  of  these  goods,  or,  what  is  the  same  thing, 
too  many  people  in  proportion  to  them,  there  must 
be  suffering.  No  matter  how  great  the  Natural  Re- 
sources ;  no  matter  how  great  our  labor  power — we  are 
compelled  to  produce  for  the  future  rather  than  the 
present.  Most  production  requires  a  year.  Unless 
there  is  food  enough  to  last  until  the  next  crop  ripens, 
there  must  be  suffering,  no  matter  how  large  a  crop 
may  be  anticipated.  When  a  shipload  of  immigrants 
lands,  they  require  shelter  at  once.  They  could  not  in 
a  densely  populated  country  build  them  houses,  from 
the  beginning,  in  much  less  than  a  year.  In  a  new 
timbered  country  one  could,  with  the  aid  of  his  neigh- 
bors, roll  up  a  very  comfortable  log  house  in  a  few 
days ;  but  not  in  New  York  City  or  its  suburbs.  One 
wants  clothing  to-day ;  it  will  take  a  long  tune  to  raise 
a  flock  of  sheep,  shear  the  wool  and  manufacture  it 
into  cloth.  He  can  not  raise  a  crop  of  cotton  and  turn 
it  into  cloth  except  with  many  months'  labor.  We 
need  a  vast  stock  of  all  this  sort  of  wealth  to  supply 
the  people  until  more  can  be  produced.  The  quantity 


98  POPULATION. 

required  is  not  unlimited ;  it  bears  a  certain  relation  to- 
the  population. 

The  articles  of  luxury  which  a  given  population 
needs  are  not  limited  in  number,  or  in  the  labor  which 
can  be  bestowed  in  their  production ;  but  the  quantity 
of  each  sort  of  goods  desired  is  limited  precisely  as  in 
the  instances  before  enumerated.  Only  a  certain  num- 
ber of  pianos  are  wanted;  although  many  persons 
would  desire  a  better  instrument.  As  a  nation  grows 
wealthy,  the  variety  of  articles  of  luxury  and  of  art 
greatly  increases  ;  and  better  quality  is  sought  for.  It 
is  seldom  that  there  is  enough  of  these  forms  of  Pro- 
duced Wealth  for  all  the  people.  In  some  periods,  and 
among  some  peoples,  wants  have  been  more  nearly  sat- 
isfied than  at  present,  because  the  wants  were  fewer. 
With  the  general  increase  of  intelligence  and  culture,, 
the  desire  for  articles  of  luxury  has  greatly  increased ; 
and  the  ability  to  make  use  of  costly  productions  is 
vastly  greater  than  ever  before.  Wants  have,  per- 
haps, developed  more  rapidly  than  the  means  for  their 
satisfaction.  With  the  standard  of  living  desired  by 
educated  and  cultivated  people,  the  quantity  of  Pro- 
duced Wealth  required  to  satisfy  wants  is  so  great  that 
it  has  never  been,  and  perhaps  never  can  be,  sufficient 
for  a  great  population. 

The  most  common  type  of  Produced  Wealth  which 
satisfies  wants  indirectly,  is  machinery.  Its  purpose  is 
to  aid  in  the  production  of  something,  such  as  clothing,, 
which  can  be  used  to  satisfy  wants,  directly.  While 
there  is  need  of  a  great  deal  of  machinery  and  many 
factories  in  the  world,  the  factories  for  the  production- 


POPULATION    AND    PRODUCED   WEALTH.  99 

of  any  one  article  are  limited  by  the  population  of  a 
nation,  or  the  market  in  foreign  nations.  There  can 
easily  be  enough  cotton  factories  to  produce  all  the 
cotton  goods  that  can  be  worn  in  the  United  States. 
There  can  be  as  many  railways  as  are  needed.  Some- 
times a  single  railway  between  two  points  could  act- 
ually handle  all  the  business  at  less  cost  than  two. 

A  large  population,  however,  needs  a  vast  amount 
of  machinery,  railroads,  etc.,  and  could  not  be  sus- 
tained, with  even  the  modern  comforts  of  the  poorer 
classes,  without  it.  Without  machinery  and  factories, 
.a  considerable  portion  of  the  American  people  would 
perish,  and  the  greater  portion  of  the  remainder  be  re- 
duced to  the  condition  of  the  poor  in  the  middle  ages. 
It  is  evident  that  the  larger  the  population,  the  more 
machinery  and  factories  are  needed. 

The  limit  of  profitable  accumulation  of  machinery, 
satisfying  wants  indirectly,  is  greatly  increased  with 
each  new  invention.  It  is  possible  for  the  world  to  be 
a  great  deal  richer  in  proportion  to  the  population  than 
it  was  a  generation  or  a  century  ago.  What  could  the 
world  have  in  early  tunes  ?  Flocks  of  sheep,  herds  of 
cattle,  castles,  dwellings,  and  a  little  rude  machinery 
and  works  of  art.  Many  utterly  useless  things,  such 
.as  the  pyramids,  were  produced  with  great  labor. 
With  the  progress  of  invention,  vast  wealth  is  profit- 
able in  the  form  of  machinery,  and  the  importance  of 
Produced  Wealth  is  greater  than  ever  before. 

It  is  evident  that  population  can  not  increase  beyond 
a,  certain  ratio  to  the  Produced  Wealth  of  the  land. 
If  there  are  too  many  people,  some  must  starve,  no 


100  POPULATION. 

matter  how  great  the  Natural  Resources  and  the  power 
of  labor.  Some  may  starve  while  others  have  an 
abundance,  or  all  may  be  on  short  rations,  but  the 
weakest  or  poorest  must  finally  die  of  hunger.  The 
desirable  state  of  affairs  is  that  there  shall  be  enough 
for  the  common  wants  of  all. 

VALUE  OF  PRODUCED  WEALTH. — Produced  Wealth 
is  not  permanent.  Time  destroys  it  all,  or  it  is  main- 
tained in  its  original  condition  only  by  constant  labor 
in  repairs.  When  destroyed,  it  can  also  be  replaced. 
Were  it  not  that  men  are  looking  forward  to  this  de- 
struction and  replacement,  its  value  would  be  deter- 
mined entirely  by  its  scarcity.  If  there  were  more 
dwellings  than  people  could  use,  they  would  have  no- 
more  value  than  mountain  scenery.  If  there  were 
more  clothing  of  a  certain  kind  than  people  could 
wear,  it  would  have  no  more  value  than  the  water  of 
the  river.  It  would  be  as  useful  as  before,  but,  like 
the  water,  being  no  longer  scarce  its  value  has  de- 
parted. People  look  forward  to  further  production ; 
they  know  that,  however  great  the  stock  of  clothing 
in  the  United  States  may  be,  it  will  all  be  worn  out 
in  a  few  years,  and  that  more  must  be  produced. 

When  Produced  Wealth  is  scarce,  in  proportion  to- 
the  population,  and  its  value  therefore  high,  every  ef- 
fort will  be  made  to  increase  it.  In  this  respect  it- 
differs  from  Natural  Wealth,  which  can  not  be  in- 
creased. When  any  form  of  Produced  Wealth  is  so 
abundant  that  its  value  is  low,  production  is  dimin- 
ished, and  the  stock  is  reduced  by  consumption. 

All  Produced  Wealth  is  the  result  of  saving.     As 


POPULATION  AND  PRODUCED  WEALTH.    101 

it  is  a  common  saying,  "It  is  not  what  one  earns,  but 
what  he  saves,  that  makes  him  rich ;  "  so  it  is  not 
what  society  produces,  but  what  it  saves,  that  consti- 
tutes the  vast  resource  of  the  productions  of  human 
industry  which  were  classified  in  an  earlier  chapter. 
A  nation  may  consume  during  a  year  the  total  pro- 
duction of  all  its  people.  Here,  there  is  no  saving, 
and  no  increase  in  Produced  Wealth.  The  people  may 
even  eat  up  and  wear  out  the  stock  of  goods  saved 
over  from  former  years.  The  stock  of  goods  deterio- 
rates by  mere  lapse  of  time,  and,  unless  replaced  from 
year  to  year,  will  naturally  diminish ;  buildings  grow 
old  and  fall  into  decay ;  machinery  rusts  out,  as  well 
as  wears  out.  Nothing  remains  as  good  as  new,  even 
if  unused. 

There  are  two  principal  causes  which  promote  sav- 
ing and  the  increase  of  Produced  Wealth.  The  first 
is  the  desire  for  a  provision  for  the  future.  One  lays 
by  for  a  rainy  day,  for  the  time  of  sickness,  for  a  year 
of  failure  of  crops,  for  old  age.  This  desire  to  save 
varies  greatly  with  different  people  and  different  na- 
tions. Where  it  is  strong,  the  stock  of  the  produc- 
tions of  industry  is  certain  to  be  large,  because  people 
will  live  in  some  way,  and  save  a  portion  of  what  they 
get.  Opportunities  for  saving,  such  as  building  and 
loan  associations,  a  postal  savings-bank,  the  purchase 
of  a  piece  of  property  to  be  paid  for  in  the  future — 
all  promote  habits  of  saving  on  the  part  of  the  people. 
It  is  sometimes  said  that  certain  men  did  not  begin  to 
grow  rich  until  they  ran  in  debt ;  the  reason  being 
that  they  saved  what  before  they  spent  on  themselves 
or  families. 


102  POPULATION. 

The  second  cause  of  saving  is  the  need  of  some  form 
of  capital.  A  workman  or  a  manufacturer  sees  that 
he  could  succeed  better  by  the  aid  of  new  machinery, 
and  saves  to  buy  it  or  to  pay  for  it. 

While  it  is  true  that  Produced  Wealth  is  always  the 
result  of  saving,  it  would  be  equally  true  to  say  that 
it  is  usually  the  result  of  extra  labor.  An  easy-going 
settler  in  the  West,  living  in  a  sod  house  or  dug-out, 
iinds  himself  just  able  to  make  both  ends  meet  in  pro- 
viding for  himself  and  family.  If,  now,  himself  and 
boys  were  to  work  more  hours  a  day,  and  in  the  extra 
hours  mold  and  burn  brick  from  the  clay  on  his  farm, 
and  afterward  lay  them  in  the  walls  of  a  house  with 
their  own  hands,  they  might  have  a  better  dwelling  as 
a  result  of  extra  labor.  It  would,  of  course,  be  sav- 
ings, since  they  might  have  used  this  extra  labor  to 
produce  some  luxury  to  eat  or  to  wear.  But  it  is 
directly  the  result  of  additional  labor.  This  is  prob- 
ably true  of  the  greater  part  of  all  accumulations  of  the 
productions  of  human  industry.  Most  men  naturally 
consume  all  they  produce,  or  get  possession  of.  When 
they  realize  the  necessity  of  saving  something,  of  some 
capital  or  machinery  to  use,  or  of  a  house  to  live  in, 
they  get  it  rather  by  additional  labor  than  by  saving 
out  of  present  products. 


CHAPTER  IV. 

POPULATION  AND  SOCIETY. 

Society,  like  labor,  is  embodied  in  population.  The 
number  of  people  in  whom  one  can  be  personally  in- 
terested is  very  limited.  A  traveling  man  once  stated 
that  he  knew  twenty-five  hundred  physicians,  whom  he 
could  call  by  name.  Few  individuals  have  the  capac- 
ity to  remember  so  much  about  so  many  people.  An 
acquaintance  with  a  few  hundred  is  all  that  most  per- 
sons care  for,  or  are  able  to  keep  up.  There  is,  how- 
ever, a  desire  for  the  presence  of  a  much  larger  num- 
ber than  one  can  become  personally  acquainted  with. 
^Te  like  to  see  a  crowd  on  the  street  or  at  a  place  of 
entertainment.  Part  of  the  pleasure  of  a  lecture  comes 
from  the  hundreds,  or  thousands,  who  may  be  in  the 
same  room,  in  sympathy  with  each  other  so  far  as  the 
common  object  of  the  evening  is  concerned.  There  is 
a  satisfaction  in  numbers,  in  the  consciousness  that 
thousands  are  enjoying  the  same  magazine,  or  book, 
that  we  are  reading.  *Even  without  a  personal  ac- 
quaintance, we  may  have  a  general  knowledge  of  men, 
and  may  be  in  sympathy  with  vast  numbers.  The 
world  would  not  be  as  satisfactory  as  it  is,  if  the  num- 
ber of  people  were  limited  to  those  we  could  person- 
ally know. 

It  has  also  been  said,  in  an  earlier  chapter,  that  a 
large  number  of  people  is  necessary  in  order  that  pro- 

(103) 


104  POPULATION. 

duction  may  be  carried  on  to  the  best  advantage,  and 
wants  satisfied  in  the  most  economical  way.  It  is  im- 
possible, with  all  the  resources  at  the  world's  com- 
mand, to  satisfy  wants  without  a  division  of  labor. 
Undoubtedly  a  very  considerable  division  of  labor 
could  be  had  in  a  community  of  a  few  thousand  peo- 
ple. There  would  be  farmers,  carpenters,  blacksmiths, 
physicians,  teachers,  merchants,  etc.,  and  the  division 
might  be  carried  far  enough  to  give  more  than  half 
the  advantage  enjoyed  at  present.  By  means  of  for- 
eign commerce  the  division  of  labor  may  include  all 
the  world,  so  that  even  a  small  nation  may  reap  the 
advantages  of  it. 

It  should  be  understood  that,  in  this  respect,  numbers 
satisfy  wants  by  their  presence,  not  by  their  efforts. 
This  is  the  distinction  between  Society  and  Labor. 
Looked  at  as  laborers,  people  satisfy  their  own  wants, 
and  aid  in  the  satisfaction  of  the  wants  of  others. 
Looked  at  as  society,  others  unite  with  us  in  desiring 
the  same  goods,  and  creating  a  demand  for  large  quan- 
tities. A  thousand  people  need  a  thousand  times  as 
much  as  one,  and  the  supply  for  the  thousand  may  be 
produced  at  one-tenth  the  cost  to  each  individual.  In 
many  instances  the  saving  is  even  greater.  The  cost  of 
a  certain  weekly  newspaper  exceeds  five  hundred  dol- 
lars a  week  before  a  single  copy  is  printed.  If  such 
a  paper  were  produced  for  one  man,  a  wealthy  prince, 
it  would  cost  him  at  least  twenty-five  thousand  dollars 
a  year.  It  is  furnished  to  its  subscribers  at  four  dol- 
lars. Its  publication  is  possible  only  because  thou- 
sands of  people  want  it ;  but  this  means  a  population 


POPULATION    AND    SOCIETY.  105 

of  millions.  One  could  hardly  afford  to  cultivate  his 
voice  for  a  lifetime  to  sing  to  one  person ;  but  if  he  is 
to  sing  to  thousands,  each  listener  may  enjoy  the  pleas- 
ure, and  the  cost  for  all  not  greatly  exceed  that  for 
an  audience  of  one.  Most  of  the  common  comforts 
and  luxuries  of  life  are  furnished  as  cheap  as  they  are, 
because  produced  in  large  quantities. 

It  is  the  wants,  and  not  the  number  of  people,  that 
make  a  demand  for  large  quantities  of  goods,  and 
their  cheap  production  possible.  If  only  one  person 
in  every  hundred  thousand  desired  a  particular  book, 
there  would  scarcely  be  a  demand  for  seven  hundred 
copies  in  the  United  States,  not  enough  to  pay  for 
publication.  If  one  person  in  every  hundred  wishes 
the  book,  it  would  require  a  nation  of  only  a  hundred 
thousand  people  to  take  a  thousand  copies.  The  pres- 
ence of  Italian  "  dagoes  "  does  not  add  at  all  to  the 
demand  for  the  rarer  articles.  For  the  common  pro- 
ductions, such  as  sugar,  shoes  and  cotton,  the  demand 
of  a  single  million  people  is  enough  to  make  produc- 
tion economical.  It  is  the  number  and  character  of 
the  wants,  and  not  the  number  and  character  of  the 
people,  we  are  taking  into  account  in  estimating  the 
advantage  of  Society.  A  large  variety  of  wants  em- 
bodied in  few  people  (provided  we  have  the  means  of 
production)  are  just  as  advantageous  in  affording  a 
large  market  as  the  same  number  of  wants  with  a. 
larger  population.  To  make  this  clear,  suppose  twa 
countries,  one  with  a  million  people,  the  other  with 
ten  millions.  Let  us  suppose  that  by  reason  of  su- 
perior intelligence,  knowledge  and  self-control,  the 


106  POPULATION. 

labor  power  of  the  one  million  is  as  great  as  that  of 
the  ten  millions.  This  is  no  unreasonable  supposition. 
A  million  picked  men  of  the  United  States  would  have 
as  great  labor  power  as  fifty  million  native  Africans. 
Let  us  also  suppose  that  the  wants  of  our  nation  of 
one  million  are  as  numerous,  and  as  great,  as  those  of 
the  ten  millions.  This,  also,  is  no  unreasonable  suppo- 
sition. They  can  not  eat  ten  times  as  great  a  quantity 
of  food,  but  they  will  desire  a  greater  variety  of  food, 
which  may  require  as  much  labor  power  to  produce. 
They  may  actually  wish  ten  times  as  much  clothing. 
They  will  wish  many  things,  such  as  pianos,  that  the 
savages  do  not  care  for.  We  assume  that  they  are 
homogeneous,  of  comparatively  like  tastes,  so  that  a 
considerable  portion  of  the  people  desire  the  same 
class  of  goods.  Now,  by  our  supposition,  the  labor 
power  of  the  two  nations  is  equally  great,  the  sum  of 
the  wants  is  equally  great;  hence  goods  can  be  pro- 
duced in  as  large  quantities  in  the  one  nation  as  in  the 
other.  The  advantage,  indeed,  is  on  the  side  of  the 
civilized  nation.  It  does  not  take  a  very  large  number 
of  people  to  cause  a  demand  for  the  common  necessa- 
ries of  life,  since  every  person  wants  the  same  thing  in 
nearly  the  same  quantities.  Every  person  uses  sugar, 
shoes  and  wheat.  Ten  thousand  families  are  enough 
to  give  employment  to  several  men  in  raising  wheat, 
even  with  improved  machinery ;  and  it  could  be  pro- 
duced, if  there  were  only  ten  thousand  families  in  the 
world,  without  very  much  more  labor,  per  bushel,  than 
at  present.  A  very  small  and  thinly  settled  country 
lias  people  enough  to  make  possible  the  production  on 


POPULATION    AND    SOCIETY.  10T 

a  large  scale  of  the  common  necessities  of  life.  When 
it  comes  to  the  more  costly  comforts  and  luxuries,  the 
demand  is  from  a  very  small  percentage  of  the  people. 
The  higher  the  civilization,  the  larger  the  proportion  of 
the  population  which  wants  them.  We  may  imagine 
a  nation  so  well  educated  that  every "  family  will  desire 
the  best  books,  and  the  highest  class  of  magazines, 
with  all  the  comforts  of  a  well-to-do  family  of  the 
United  States.  With  such  a  civilization,  there  may 
be  in  a  country  of  fifty  thousand  people  as  large  a  de- 
mand for  the  rarer  kinds  of  goods  as  would  exist 
among  five  million  Poles  with  a  few  American  over- 
seers. Many  persons  want  these  things  who  can  not 
get  them,  but  they  will  never  be  produced  until  people 
desire  them.  Compare  the  wants  of  a  tribe  of  Afri- 
can savages,  or  of  an  Indian  tribe,  with  those  of  a 
merchant  or  mechanic  in  the  United  States ! 

While,  therefore,  the  presence  of  a  considerable 
number  of  people  is  desirable,  there  is  a  limit  to  the 
number  required  by  the  need  for  Society.  A  hundred 
million  persons  may  afford  no  better  opportunity  for- 
the  economical  satisfaction  of  wants  than  ten  million. 
Indeed,  there  is  reason  to  believe  that  a  population  of 
one  million  highly  cultured  people  would  afford  op- 
portunity for  carrying  the  division  of  labor  as  far  as 
is  for  the  advantage  of  the  race,  and  give,  practically, 
all  the  economic  advantages  to  be  had  from  large 
numbers.  Both  their  wants  and  their  labor  power 
would  be  from  ten  to  fifty  times  as  great  as  those  of  an 
equal  number  of  savages.  They  would  gain  greatly 
by  exchange  with  other  nations,  in  articles  which 


108  POPULATION. 

could  be  better  produced  elsewhere.  There  will  al- 
ways be  some  things  in  the  production  of  which  some 
one  nation  will  have  a  decided  advantage.  But  in  the 
satisfaction  of  most  of  the  wants  of  its  people,  it  is 
probable  that,  leaving  out  advantages  of  climate  and 
soil,  a  nation  of  one  million  people  of  the  highest  in- 
telligence and  knowledge,  would  be  able  to  reap  so 
nearly  all  the  advantages  of  a  division  of  labor  that 
the  rest  can  be  safely  disregarded.  The  difference  be- 
tween one  family  providing  for  all  its  wants,  and  a 
division  of  labor  among  a  million  people,  is  almost  be- 
yond the  power  of  imagination.  Most  of  the  advan- 
tages will  have  been  gained  before  we  reach  the  mill- 
ion limit,  and  the  gain  from  further  additions  will  be 
barely  perceptible.  In  this,  we  have  assumed  an 
educated  and  cultured  population,  equal  to  the  best 
and  most  intelligent  in  the  United  States ;  let  us  say 
the  best  million  of  the  sixty-five.  It  will  be  readily 
seen  how  the  presence  of  this  million  people  would 
give  us  nearly  all  the  advantages  we  now  enjoy.  The 
demand  for  very  many  goods  does  not  now  extend  much 
further.  It  is  the  number  of  wants,  combined  with 
labor  power  to  satisfy  them,  that  creates  the  demand 
and  makes  the  division  of  labor  possible  ;  the  char- 
acter^ rather  than  the  number  of  the  people. 

In  satisfying  the  wants  that  grow  out  of  the  need 
of  Society,  then,  as  well  as  those  which  come  from 
our  need  of  the  other  resources,  we  find  that  a  con- 
siderable population  is  an  advantage,  but  that  there  is 
a  limit  beyond  which  this  advantage  ceases. 

We  have  thus  far  said  nothing  about  the  agreeable- 


POPULATION    AND    SOCIETY.  109 

ness  or  disagreeableiiess  of  neighbors  as  a  part  of  So- 
ciety. After  it  has  increased  to  a  few  dozen  people, 
the  social  advantage  of  a  larger  number  depends  alto- 
gether on  their  character.  When  there  come  to  us 
cultured  and  Christian  Englishmen,  our  society  is  en- 
riched by  so  much.  When  we  receive  a  shipload  of 
the  lowest  Poles,  Italians  or  Chinamen,  we  have  more 
.people,  but  society  is  so  much  the  worse.  We  have 
them  to  govern,  or  rather  (to  our  shame  be  it  said)  to 
help  govern  us.  We  come  in  contact  with  their  vices. 
Their  filth  is  a  source  of  sanitary  danger.  Socially, 
they  are  so  much  rubbish,  which  we  could  well  afford 
to  pay  something  to  get  rid  of.  Whatever  advantage 
is  gained  from  their  labor  is  more  than  lost  by  their 
presence.  The  gain  from  their  labor  accrues  to  a  few 
wealthy  manufacturers.  The  loss  is  the  loss  of  the 
entire  people.  It  is  unfortunate  for  us  to  add  to  our 
population  a  single  person  who  has  not  already  a  desir- 
able standard  of  living,  and  labor  power  enough  to 
maintain  it. 

VALUE  or  SOCIETY. — The  value  of  the  society  of 
one  class  of  people  is  very  different  from  that  of  an- 
other class.  To  have  value,  Society  must  first  have 
utility.  The  presence  of  a  highway  robber  has  no 
utility  to  a  traveler.  The  presence  of  a  friend  dur- 
ing the  journey  might  be  very  useful.  The  society  of 
Chinese  has  no  utility  for  Americans,  even  when  their 
labor  is  desired.  The  society  of  families  of  intelli- 
gence, good  morals  and  agreeable  disposition  is  of 
very  high  utility.  In  the  satisfaction  of  wants  indi- 
rectly, the  society  of  a  thousand  Hottentots,  who  con- 


110  POPULATION. 

sumed  no  goods,  would  add  very  little  to  the  oppor- 
tunity of  increase  in  economic  production  through  the 
division  of  labor.  The  society  of  a  thousand  average 
American  families  would  add  materially  to  the  wants 
to  be  satisfied  and  to  the  demand  for  goods. 

Granting  that  the  society  of  any  particular  persons 
or  class  has  utility  for  us,  its  value,  like  the  value  of 
all  resources,  depends  on  its  scarcity.  The  man  who 
has  all  the  agreeable  acquaintances  he  can  meet,  does 
not  greatly  care  for  more.  The  presence  of  his  man 
Friday  had  great  value  to  Robinson  Crusoe.  The 
presence  of  another  man  would  have  been  desirable, 
but  not  worth  so  much  to  him. 

So  in  satisfying  wants  indirectly.  A  single  family 
can  divide  the  necessary  labor  between  its  members,  to 
great  advantage.  A  thousand  families  can  carry  the 
division  of  labor  to  an  extent  which  will  gain  the 
major  part  of  all  that  is  possible  to  be  gained  by  this 
means.  The  value  of  the  society  of  another  thousand 
would  not  be  anything  like  that  of  the  first  thousand. 
The  value  of  the  society  of  a  tenth  million  would  be 
very  little.  As  in  most  other  instances^  value  de- 
creases very  rapidly  as  the  want  becomes  partially 
satisfied.  A  little  of  anything  desired  is  a  hundred 
times  the  value  of  the  same  quantity  after  the  want  is 
nearly  satisfied.  Our  object  is  to  satisfy  wants.  The 
quantity  of  anything  which  man  desires  is  limited. 
Value  is  what  a  given  quantity  is  worth  to  him.  After 
he  has  all  he  wants,  an  additional  quantity  is  worth 
nothing.  Long  before  one's  wants  are  fully  satisfied, 
the  value  of  the  article  decreases.  The  value  of  So- 


POPULATION   AND    SOCIETY.  Ill 

ciety  a  hundred  years  ago,  in  the  United  States,  found 
expression  in  the  desire  to  get  more  men  of  a  good 
class  from  Europe.  Now  it  has  no  value  at  all,  and 
the  instincts  of  the  people  have  led  to  a  realization  of 
the  fact.  The  country  now  has  all  the  people  it  needs. 
In  all  this  it  must  not  be  forgotten  we  are  consider- 
ing Value  in  Use,  and  not  Value  in  Exchange. 

We  may  sum  up  the  last  four  chapters  as  follows : 

1.  The  Resources  of  Nature  can  not  be  increased; 
but  are  very  abundant,  and  will  satisfy  the  wants  of  a 
certain  number  of  people  better  than  when  population 
is  less  dense.     When  the  number   exceeds  a  certain 
limit,  in   a  given   state   of  civilization   and  progress, 
there  is  less  of   the    Resources    of   Nature   for   each 
one;    this  limit  is  the  point   of   diminishing   returns 
to  labor  bestowed  on  land.     The  discovery  of   new 
Natural  Resources  opens   the  way  for  satisfying  the 
wants  of  a  larger  population,  but  discovery  is  not  cre- 
ation, and  nothing  can  be  discovered  which  does  not 
exist. 

2.  The  labor  power  of  nations  is  seldom  in  propor- 
tion to  their  population  ;  the  labor  power  of  any  nation 
may  be  multiplied  many  times  with  no  increase  in 
the  population ;  and  there  may  be  a  great  increase  in 
population  with  very  little    increase  in    labor  power. 
The  labor  power  of  a  nation  depends  on  the  kind  of 
people  rather  than  on  their  number.     With  no  immi- 
gration, however,  there  is  no  reason  why  increase  of 
labor  power   should  not  keep  pace  with   population  ; 
and,  with  education  and  proper  training,  the  power  of 

8 


112  POPULATION. 

the  people  to  labor  should  increase  faster  than  their 
number. 

3.  The  accumulated  Resources    Produced  by  Hu- 
man Industry  bear  no  fixed  relation  to  the  number  of 
people. 

4,  The  advantage  of  Society  depends  on  the  char- 
acter, and  not  on  the  number  of  people. 

There  is  an  almost  inestimable  advantage  in  a  popu- 
lation large  enough  for  the  purposes  previously  de- 
scribed ;  but  this  number  is  comparatively  small,  and 
there  is  only  slight  gain  in  further  increase. 

It  is 'evident,  then,  that  the  wants  of  each  person 
can  be  satisfied  much  more  easily  and  fully  by  an  in- 
crease of  population  up  to  a  certain  limit.  When  that 
limit  is  passed,  there  will  at  first  be  a  slight  gain  in 
some  ways  and  a  loss  in  others ;  and  it  is  probable 
that  the  population  might  be  doubled,  and,  it  may  be, 
multiplied  by  ten,  without  greatly  affecting  the  welfare 
of  each  individual ;  but  with  continued  increase  in  the 
number  of  people  there  is  certain  to  come  a  time  when 
the  satisfaction  of  the  wants  of  each  individual  will  be 
far  more  difficult  than  if  the  population  were  smaller. 
Not  more  difficult  than  it  was  a  half  century  ago,  but 
more  difficult  than  it  would  be  now,  were  there  fewer 
people.  This  condition  of  things  has  been  reached  in 
England.  England  suffers  from  many  traditions,  the 
presence  of  privileged  classes,  and  misgovernment.  No 
doubt  the  average  welfare  of  each  individual  might  be 
far  greater  than  it  is,  but  it  is  impossible  that  each 
should  have  as  much  as  if  there  were  fewer  people  on 
the  island.  The  condition  of  affairs  is  disguised  by 


POPULATION   AND   SOCIETY.  113 

importations  from  foreign  countries,  so  that  the  En- 
glish people  use  not  only  the  land  of  England,  but  the 
wheat  fields  of  the  Dakotas  and  Southern  Russia. 
Were  the  English  people  shut  up  in  England,  the  im- 
possibility of  each  having  as  much  as  if  there  were 
fewer  would  be  plainly  seen.  Her  statesmen  realize 
this,  and  are  sending  colonies  to  all  the  world.  She 
is  seeking,  not  for  more  lands  to  conquer,  but  for  more 
lands  to  colonize. 

In  this  country,  the  question  is  not  one  of  emigra- 
tion, but  of  immigration.  Ideas  penetrate  the  masses 
of  the  people  slowly,  and  when  once  accepted  retain 
their  hold  long  after  changed  conditions  have  made 
them  dangerous.  At  the  close  of  the  Revolutionary 
War,  we  were  a  small  people  with  a  great  country, 
and  little  of  the  land  was  in  actual  use.  There  was 
room  for  millions  more ;  and  our  fathers  rightly  judged 
that  the  nation  would  be  better  able  to  defend  itself 
.against  foreign  powers  if  it  had  more  men.  There  is 
.also  a  pride  in  numbers.  We  like  to  brag  of  how 
great  we  are,  and  how  many  we  are.  The  fathers  were 
right  in  holding  that  an  addition  of  a  few  more  mil- 
lions of  men  like  themselves  would  be  of  great  advan- 
tage. The  men  who  came  were  of  a  good  class.  They 
expected  hardships  in  the  New  World,  and  they  were 
men  of  the  temper  and  ability  to  meet  them.  The 
idea  that  immigration  is  an  advantage  remained  in  the 
minds  of  the  people  after  immigration  became  one  of 
our  greatest  dangers.  The  early  immigrants  were  not 
objectionable  as  society.  They  were  English,  Scotch, 
Irish  and  German — people  like  ourselves,  whose  chil- 


114  POPULATION. 

dren  and  grandchildren  are  to-day  among  the  best  of 
American  citizens. 

All  this  is  now  changed.  This  country,  if  not  full,, 
is  so  nearly  filled  that  land  and  other  Natural  Re- 
sources should  be  saved  for  the  children  of  those  now 
here.  It  is  to  be  remembered  that  when  there  is  land 
enough  and  room  enough,  population  increases  very 
rapidly,  without  immigration.  We  should  soon  be  a 
hundred  million  if  no  other  emigrants  came  to  our 
shores.  Were  there  land  enough  without  crowding,  a 
generation  thereafter  would  see  two  hundred  millions. 
The  majority  of  the  people  we  are  now  receiving  from 
abroad  are  no  longer  desirable.  We  have  long  since 
passed  the  point  where  increase  of  numbers  is  of  any 
advantage.  We  have  more  than  enough  to  use  the 
Resources  of  Nature  beyond  the  limit  of  diminishing 
returns  ;  more  than  enough  for  society  and  to  afford 
the  widest  opportunity  for  the  division  of  labor. 
There  is  still  room  for  the  cultured  Englishman  and 
German.  They  add  diversity  to  our  society,  and  their 
continued  coming  will  be  a  gain.  But  they  are  only  a 
fraction  of  one  per  cent,  of  the  immigrants  we  get. 
Most  of  those  who  come  to  us  are  not  the  best,  but  the 
worst,  of  the  nation  which  sends  them.  The  Italians 
are  here  in  large  force,  and  they  are  the  class  of  Ital- 
ians which  Italy  is  glad  to  spare.  We  have  narrowly 
escaped  being  overwhelmed  by  a  flood  from  China.  It 
illustrates  the  strength  of  old  terms  and  sentences  from 
which  the  idea  has  departed,  to  see  how  many  good 
men  of  New  England  were  horrified  at  the  thought 
of  restricting  Chinese  immigration.  They  appeared 


POPULATION   AND   SOCIETY.  115 

utterly  heartless  and  brutal  in  regard  to  their  own 
countrymen.  They  were  not  so  in  reality;  it  was 
merely  the  strength  of  old  methods  of  thought,  and 
the  habit  of  saying :  "  America  is  to  be  an  asylum  for 
all  nations."  As  if  the  splendid  civilization  of  Amer- 
ica is  to  be  buried  under  the  rubbish  cast  off  from  all 
nations  in  the  world !  Many  of  these  men  were  Chris- 
tians and  firm  believers  in  the  Scriptures.  When  the 
Lord  saw  that  the  race  of  men  was  so  wicked  that 
nothing  could  be  made  out  of  them,  he  destroyed  them 
with  a  flood,  in  order  that  the  world  might  be  filled  of 
the  descendants  of  one  family,  better  than  the  others. 
It  is  a  mistake  to  suppose  that  the  teaching  or  the 
spirit  of  the  Bible  requires  us  to  open  this  civilization 
to  the  influence  of  the  lowest  classes  of  every  nation 
in  the  world.  The  United  States  was  originally  settled 
by  men  of  splendid  stock.  They  brought  with  them 
the  most  advanced  ideas  of  their  time.  The  doctrines 
of  religious  liberty,  of  moral  and  religious  training, 
of  general  education,  of  political  liberty  restrained  by 
firm  government,  of  the  development  of  the  individual 
—  these  and  many  others  have  helped  to  make  the 
nation  what  it  is.  To  permit  it  to  be  buried  under  a 
flood  of  Chinese,  Italians,  Poles,  and  the  lowest  people 
of  every  nation  in  the  world,  would  seem  to  be  the 
thought  of  a  demon  determined  to  arrest  the  progress 
of  the  race.  Our  duty  to  send  missionaries  to  teach 
the  gospel  in  heathen  lands  is  clear.  Our  duty  to  pro- 
tect our  homes  and  our  land  against  the  incoming 
flood  of  ignorance  and  vice,  is  no  less  clear. 


CHAPTER  V. 

THE  LAW  OF  THE  INCREASE  OF  POPULATION. 

Malthus  occupies  the  same  relation  to  the  subject  of 
Population  as  Adam  Smith  to  that  of  Labor.  Per- 
haps no  man  has  been  more  misrepresented,  not  be- 
cause of  any  lack  of  clearness  in  his  writing,  but  be- 
cause what  he  wrote  is  seldom  read,  except  by  special 
students  of  the  subject;  and  flippant  writers  have 
found  it  convenient  to  use  his  name  for  almost  any- 
thing they  pleased.  Malthus  was  an  English  clergy- 
man, the  father  of  eleven  children,  a  Christian  who 
desired  to  alleviate  human  misery,  and  to  do  all  that 
lay  in  his  power  toward  the  development  of  the  race 
in  its  highest  character.  His  "  Essay  on  Population," 
published  a  hundred  years  ago,  was  mainly  devoted  to 
an  historical  investigation  of  the  causes  which  have 
kept  population  down  to  its  present  limit.  He  was  a 
keen  logician,  a  careful  investigator,  and  the  world 
owes  him  a  great  debt.  John  Stuart  Mill  pressed  the 
same  views  somewhat  farther  than  did  Malthus ;  yet 
so  has  the  name  of  Malthus  been  identified  with  the 
subject  of  population,  that  no  one  thinks  of  any  other 
name  in  connection  with  it. 

One  who  writes  to-day  has  the  advantage,  not  only 

of  Malthus'  investigation,  but  of  all  criticism  that  has 

been   made   upon  it,  and  of  the  new  truth   evolved 

through  the  discussions  of  a  hundred  years.     I  have 

(116) 


THE   LAW   OF   THE   INCREASE   OF   POPULATION.       117 

sought  neither  to  avoid  nor  to  follow  the  methods  of 
statement  of  Adam  Smith  on  Labor,  or  of  Malthus  on 
Population.  My  only  purpose  is  to  present  what  seems 
the  truth  on  each  subject,  in  as  direct  and  simple  a 
manner  as  I  am  able. 

Men,  like  plants  and  animals,  tend  to  fill  any  coun- 
try in  a  period  which  is  very  brief  compared  with 
human  history.  Clear  off  the  forest,  and  a  crop  of 
weeds  springs  up  the  first  season.  They  were  not 
there  before,  because  there  was  not  room  enough  for 
them  to  grow.  If  the  ground  is  kept  clear  of  other 
growths,  the  seeds  of  a  single  plant  will  soon  cover  a 
large  area  with  luxuriant  vegetation.  Nature  is  very 
prolific,  and  there  is  no  limit  to  the  possible  increase 
of  any  species  of  plant  or  animal,  except  the  lack  of 
room,  subsistence,  or  conditions  of  life  favorable  to  it. 
Were  every  other  species  of  vegetation  kept  down,  a 
single  bushel  of  wheat  could  cover  all  that  portion  of 
the  earth  in  which  the  climate  is  fitted  to  its  growth, 
in  a  period  of  twelve  years.  A  few  horses  left  in 
South  America  filled  all  the  plains.  There  are  but 
few  animals  which  would  not  fill  the  whole  earth  with, 
their  kind  in  a  hundred  years  if  there  were  no  other 
animals  to  interfere  with  them.  Man  is  no  exception-, 
to  the  law  of  rapid  increase  where  there  is  room  for- 
him.  To  find  that  room  we  must  take  a  new  country,, 
where  there  is  work  for  all,  with  a  living,  respectable 
in  the  eyes  of  one's  neighbors,  for  all  who  are  willing 
to  work ;  and  where  there  is  no  reason  for  delay  in  mar- 
riage. An  approach  to  such  a  condition  of  things  was 
found  in  this  country  a  few  generations  ago.  People 


118  POPULATION. 

had  a  poorer  living  than  at  present,  but  there  was  more 
equality.  Young  people  were  expected  to  marry  at  an 
early  age,  and  it  was  generally  believed  that  the  mar- 
ried man  made  as  good  a  living  as  the  single  man.  The 
conditions  for  the  rapid  increase  of  population  were 
far  from  the  most  favorable  ;  but  from  1790,  the  time 
when  the  first  census  was  taken,  the  population  of  the 
entire  United  States  doubled,  by  natural  increase,  in 
twenty-three  years ;  and  doubled  again  in  about  the 
same  period.  There  was  very  little  immigration. 
The  census  of  1790  showed  a  population  of  less  than 
4,000,000  ;  fifty  years  later,  in  1840,  there  were  more 
than  17,000,000.  Malthus  assumed  a  tendency  of 
population  to  double,  in  round  numbers,  as  often  as 
once  every  twenty-five  years ;  but  under  favorable  cir- 
cumstances, with  plenty  of  room,  and  no  doubt  of  a 
livelihood  for  each  one  and  his  family,  it  is  evident  that 
population  would  increase  much  more  rapidly,  prob- 
.ably  doubling  every  eighteen  or  twenty  years.  The 
precise  period  is,  however,  of  little  importance  com- 
pared with  the  fact  that  the  increase  is  in  geometrical 
progression.  Geometrical  progression  is  familiar  to 
most  persons,  in  the  story  of  the  horse-shoe  nails  ; 
yet  we  are  all  astonished  at  the  results,  the  moment 
we  make  the  calculation.  The  number  of  people  on 
the  earth  at  present  is  estimated  at  1,500,000,000.  If 
the  population  of  the  United  States  were  only  60,000,- 
000,  and  were  to  double  every  twenty-five  years,  in 
twenty-five  years  there  would  be  120,000,000  ;  in  fifty 
years,  240,000,000;  in  seventy-five  years,  480,000,- 
000  ;  in  one  hundred  years,  960,000,000 ;  in  one  hun- 


THE  LAW   OF  THE   INCREASE   OF  POPULATION.       119 

dred  and  twenty-five  years,  1,920,000,000,  nearly  one- 
fourth  more  than  the  present  population  of  the  globe. 
Either  the  United  States,  England  or  Germany  would 
re-people  the  earth  in  less  than  a  hundred  and  fifty 
years,  if  the  inhabitants  of  every  other  land  were 
swept  off  by  a  pestilence.  A  single  million  people 
would  fill  the  United  States  with  64,000,000,  its  pres- 
ent population,  in  less  than  a  hundred  and  fifty  years. 
The  question  of  the  future  is  whether  the  people  of 
the  United  States  in  the  next  century  shall  be  de- 
scended from  the  best  element  of  American  citizens,  or 
from  Chinese,  Italians,  and  other  immigrants.  India  is 
f  ull  of  people— 240,000,000  ;  China's  population  could 
overrun  the  entire  earth  in  less  than  a  century  if  it 
had  the  opportunity. 

For  a  hundred  years,  every  possible  effort  has  been 
made  to  break  the  force  of  these  statements,  which  one 
would  suppose  must  be  almost  self-evident.  It  is  diffi- 
cult to  see  how  any  one  can  doubt  their  truth  the  mo- 
ment his  attention  is  called  to  them,  but  some  strange 
ideas  have  been  advanced. 

The  most  common  objection  is  that  these  statements 
can  not  possibly  be  true,  because,  as  a  matter  of  fact, 
population  has  not  usually  increased  at  the  rate  men- 
tioned. But  no  one  said  that  it  had.  Such  an  increase 
for  a  thousand  years  would  be  an  impossibility,  because 
the  earth  would  not  support  the  people.  It  is  only 
affirmed  that  it  is  the  tendency  of  population  to  in- 
crease at  this  rate,  that  it  will  do  so  where  there  is 
room  for  it — where  the  people  feel  reasonably  sure  of 
a,  living,  and  where  the  increase  is  not  checked  by  ex- 


120  POPULATION. 

ternal  causes,  sucli  as  war  or  pestilence.  Mr.  J.  E» 
Cairnes  has  illustrated  the  truth  by  centrifugal  and 
centripetal  forces :  the  tendency  of  the  attraction  of 
gravitation  is  to  draw  a  planet  to  the  sun,  while  the 
tendency  of  its  momentum  is  to  fly  off  in  a  straight, 
line ;  the  result  of  the  combined  action  is  to  cause  the 
planet  to  move  in  an  ellipse  around  the  attracting 
body.  We  should  make  little  progress  in  science  if 
we  did  not  understand  and  measure  both  these  forces ; 
when  we  say  the  tendency  of  the  attraction  of  gravita- 
tion is  to  draw  a  planet  to  the  sun,  we  mean  that  it 
would  draw  it  there  were  there  no  opposing  forces. 
The  tendency  is  a  real  force,  which  must  be  taken  ac-; 
count  of,  though  the  actual  result  can  not  be  ascer- 
tained except  by  estimating  the  combined  effect  of  aD 
the  forces. 

The  final  check  to  the  increase  of  population  is  lack 
of  subsistence,  not  for  all,  but  for  the  poor.  But  there 
are  other  checks  which  diminish  the  rate  of  increase, 
and  in  most  civilized  countries  prevent  its  reaching  the 
point  where  any  considerable  portion  of  the  people 
suffer  from  lack  of  food. 

War. — War  has  always  been  one  means  by  which 
population  has  been  kept  down.  As  the  animals  have 
been  hunted  by  man,  so  men  have  been  hunted  by 
each  other.  A  Scotch  laird  said  he  did  not  care 
how  hard-shot  his  estate  might  be,  by  one  who  leased 
it  for  hunting,  since  there  were  always  enough  animals 
left  to  replenish  it.  But  for  the  natural  power  of 
men  to  multiply  rapidly,  the  race  of  men  might  have 
become  extinct  in  the  barbarous  wars  of  savage  tribes* 


THE   LAW    OF   THE    INCREASE    OF    POPULATION.       121 

£uch  civilized  nations  as  the  Greeks  and  Romans,  and 
Eastern  nations  before  them,  carried  death  where  they 
carried  their  arms.  The  number  of  people  may  be  no 
less  to-day  than  if  there  had  been  no  wars ;  the  de- 
struction of  war  has  given  room  for  more  rapid  in- 
crease in  time  of  peace,  and  the  limit  of  subsistence 
has  not  been  so  quickly  reached.  There  is  reason  to 
hope  that  the  slaughter  of  men  by  each  other  will,  in 
time,  be  abandoned,  and  this  check  to  the  increase  of 
population  will  then  be  removed. 

Cruelty. — Closely  allied  to  war  is  simple  cruelty. 
Human  life  has  often  been  held  very  cheap.  Slavery, 
oppression,  and  cruelty  of  all  kinds,  have  destroyed  life 
recklessly  all  through  the  world's  history.  Savage 
tribes  have  put  to  death  all  that  came  in  their  way, 
women  and  children  as  well  as  men  ;  and  some  of  the 
highest  civilizations  of  the  ancient  world  have  shown 
more  cruelty  than  the  savage.  The  history  of  the 
world  is  red  with  blood.  Unfortunately,  it  has  often 
been  the  best  men  whose  lives  were  lost.  Could  the 
earth  have  been  peopled  by  their  descendants,  instead 
of  their  slayers,  civilization  might  have  made  more 
rapid  progress.  Suppose  the  Huguenots  had  not  been 
slaughtered,  there  might  have  been  no  more  people 
in  France  to-day,  but  a  considerable  portion  of  the 
French  population  would  now  be  descended  from  those 
Huguenots.  Suppose  the  Christian  martyrs  could  have 
peopled  the  earth  instead  of  their  slayers ! 

Pestilence. — Pestilence  is  sometimes  only  a  part  of 
the  destruction  caused  by  famine  ;  but,  aside  from  thisy 
the  loss  of  lives  from  such  raging  diseases  as  cholera,. 


122  POPULATION. 

and  even  smallpox  before  the  principle  of  vaccination 
was  discovered,  has  contributed  greatly  to  the  keeping 
down  of  population.  Such  pestilences  as  the  Black 
Death  of  the  fourteenth  century  have  contributed 
their  share.  All  pestilences,  not  the  result  of  fam- 
ine, are  filth  diseases ;  not  so  often  caused  by  filthy 
habits  in  the  immediate  sufferers,  or  even  in  the  na- 
tions where  they  work  their  greatest  destruction,  as  by 
those  of  other  people  and  other  lands  in  which  they 
originate.  The  filth  of  the  East  has  been  the  cause 
of  cholera  in  Western  nations.  With  the  spread  of 
medical  and  sanitary  science,  a  pestilence  will  soon  be 
a  thing  of  the  past.  Smallpox  is  practically  under 
control,  and  the  present  generation  can  scarcely  under- 
stand the  ravages  it  made  a  century  ago.  There  is 
very  little  to  fear  from  cholera  in  this  country,  not- 
withstanding the  certainty  that  it  will  be  occasionally 
brought  to  our  shores.  The  lower  nations  will  in  time 
learn  more  of  sanitary  science,  and  pestilences  will  be- 
come less  frequent  in  the  East.  These  great  checks 
to  the  increase  of  population  are  certain  to  act  with 
less  power  in  the  future,  and  may  in  time  be  entirely 
removed. 

With  the  history  of  the  past  before  us,  it  seems  pe- 
culiarly fortunate  that  this  tendency  to  rapid  increase 
of  population  exists.  It  has  enabled  man  to  fill  the 
earth,  to  repeople  localities  almost  depopulated  by  war 
and  pestilence,  and  has  provided  a  powerful  force  which 
almost  immediately  closes  up  any  gap  in  the  number 
of  people,  when  there  are  fewer  than  the  land  will  com- 
fortably support. 


THE   LAW    OF   THE   INCREASE    OF   POPULATION.       123 

Overcrowding. — Where  the  population  has  not  been 
kept  down  by  war  and  pestilence,  the  simple  crowding* 
of  people  in  narrow  quarters  itself  tends  to  prevent  a 
rapid  increase  in  their  number,  through  an  increased 
death  rate.  It  is  true  that  the  death  rate  in  great 
cities  of  the  present  is  less  than  in  many  parts  of  the 
country,  because  of  the  excellence  of  modern  sanitary 
arrangements ;  but  this  is  only  true  of  the  city  as  a 
whole.  In  the  localities  which  are  the  more  closely 
crowded  with  the  poor,  the  death  rate,  especially  among- 
children,  is  far  greater  than  in  the  city  at  large,  or  in 
the  country.  It  is  not  possible  to  obtain  accurate  sta- 
tistics of  ancient  times,  but;  from  what  is  known  of  the 
methods  of  living,  there  can  scarcely  be  a  doubt  that 
the  mortality  caused  by  the  huddling  together  of  people 
in  cities  has  been  a  powerful  check  on  the  increase  of 
the  population.  The  sanitary  arrangements  where 
people  are  few,  may  be  even  worse  than  in  crowded 
cities,  but  the  isolation  and  wide  space  of  country  are 
themselves  among  the  best  sanitary  measures.  A  fam- 
ily of  ten  people  may  occupy  a  house  of  two  small 
rooms  in  the  country,  but  this  is  a  very  different  thing- 
from  two  rooms  in  a  tenement  house  in  a  city,  with 
other  families  over  and  under  and  around  them,  and 
no  ground  to  step  upon  but  the  crowded  street.  As 
with  war  and  pestilence,  this  check  is  also  rapidly  dis- 
appearing, or  rather,  in  consequence  of  sanitary  ar- 
rangements, population  will  bear  much  greater  crowd- 
ing than  before.  In  such  cities  as  Glasgow,  the  pro- 
vision, even  for  the  poor,  is  so  good  that  we  must  ex- 
pect a  rapidly  diminishing  death  rate ;  and  the  most 


124  POPULATION. 

crowded  portions  of  the  largest  cities  in  the  world  may 
be  made  more  healthful  than  some  country  villages. 
All  this,  however,  is  accomplished  at  a  rapidly  increas- 
ing cost  as  population  becomes  more  dense. 

Famine. — When  the  natural  tendency  of  popula- 
tion to  increase  is  not  overcome  by  other  methods,  it 
soon  presses  upon  subsistence.  We  do  not  mean  by 
this  that  the  earth  is  not  able  to  produce  ten  times 
more  than  it  does  at  present ;  but  that  in  the  state  of 
civilization  at  any  given  period,  population  will  press 
upon  the  subsistence  which  is  actually  produced  by  the 
methods  of  the  period.  Shortage  is  first  shown  in  fre- 
quently recurring  famines.  In  good  years  there  is  suf- 
ficient, but  there  is  only  a  small  reserve  accumulated 
for  bad  years;  and  a  series  of  bad  years,  or  a  year 
in  which  the  product  is  greatly  reduced,  means  a  fam- 
ine. It  is,  of  course,  the  poor  who  suffer.  There  will 
always  be  enough  for  a  large  portion  of  the  popula- 
tion, and  those  who  have  most  wealth  will  be  able  to 
secure  abundance ;  but  though  a  few  may  have  more 
than  they  need,  and  may  waste  in  carelessness,  there  is 
not  enough  for  all,  even  if  it  were  equally  divided. 
This  is  true  of  all  recent  famines — in  Russia,  India  and 
China.  A  few  years  ago,  in  northern  China,  the  peo- 
ple had  eaten  the  green  earth  bare,  and  were  dying  of 
hunger  ;  the  tales  of  the  famine  in  Russia  in  1891-92 
made  little  impression  on  our  ears,  for  we  accepted  the 
fact  that  the  suffering  must  be  great,  and  cared  to  hear 
as  little  about  it  as  we  might.  In  some  provinces,  the 
people  ate  everything  that  could  be  eaten,  and  then  lay 
down  to  die.  Comparatively  few  people  die  of  actual 


THE   LAW   OF   THE   INCREASE   OF   POPULATION.       125 

starvation,  even  in  a  famine.  Insufficiency  of  food 
"brings  disease.  A  general  state  of  unhealthfulness 
prevails,  and  those  who  die  of  diseases  caused  by  in- 
sufficient food,  and  from  other  effects  of  the  famine, 
.are  many  more  than  those  who  actually  starve.  If  no 
other  cause  acts  to  prevent  the  increase  of  population 
in  accordance  with  its  natural  tendency,  we  may  be 
sure  we  shall  always  find  its  growth  checked  here. 

It  is  easy  to  say  that  with  better  methods  of  produc- 
tion, better  government,  and  more  equal  distribution 
•of  products,  the  present  population  of  every  province 
of  Russia  could  easily  be  supported ;  but  it  is  certain 
that  in  the  present  condition  of  Russian  society  these 
improvements  will  not  be  made,  even  with  the  certainty 
•of  a  famine  in  some  province  every  few  years.  Popu- 
lation has  reached  the  limit  of  subsistence  in  the  pres- 
ent state  of  society  in  that  country.  The  tune  will 
come  when  it  will  support  twice  as  many  in  greater 
comfort ;  but  twice  as  many  people  at  present  would 
mean  more  deaths  from  starvation,  and  greater  suffer- 
ing to  all.  Neither  has  the  pressure  of  population 
upon  subsistence  anywhere  in  the  world's  history,  of 
itself,  tended  to  improved  methods  of  cultivation,  or  to 
a  provision  for  the  support  of  a  larger  number.  The 
greatest  progress  has  been  made  in  countries  like  the 
United  States,  which  have  not  been  overpopulated,  and 
where  the  opportunities  for  each  one  to  improve  his 
condition  are,  therefore,  so  much  the  greater.  The  im- 
provement of  the  individual  leads  to  practical  improve- 
ment in  methods  of  production.  Progress  in  over- 
crowded countries  is  due  to  other  causes,  and  is  in 


126  POPULATION. 

spite  of   the  pressure  of   population  on   subsistence,, 
rather  than  in  consequence  of  it.      oC*~ 

Def erred  Marriages. — The  checks  which  tend  to 
prevent  the  increase  of  population  thus  far  noticed 
may  all  be  reduced  to  misery,  vice  or  crime.  They  are 
such  as  we  are  seeking  to  avoid.  The  population  has 
been  kept  down  by  starvation,  overcrowding  and  pes- 
tilence, and  by  wars,  murders  and  other  crimes.  There 
is  an  entirely  different  class  of  influences,  which  in 
civilized  countries  operate  to  counteract  the  tendency 
of  population  to  increase  with  its  natural  rapidity. 
The  most  important  of  these  is  the  delay  of  marriage 
through  one's  inability  to  support  a  family  in  the  man- 
ner he  desires  or  considers  respectable.  In  a  new 
country,  where  we  suppose  population  to  increase  with 
less  restraint,  people  marry  at  an  early  age.  It  is 
evident  that  early  marriages  mean  larger  families.  It 
is  not  simply  that  each  family  has  a  larger  number  of 
children ;  they  have  them  earlier  in  life,  and  the 
second  and  third  generations  begin  sooner.  Many  a 
man  now  marries  at  thirty  who  would  have  married  at 
twenty-five  or  earlier  had  he  been  able  to  support  a 
wife.  All  causes  which  tend  to  delay  marriage  act  as 
a  check  on  the  increase  of  population.  These  causes- 
increase  as  population  presses  harder  upon  subsistence. 
In  a  new  country  such  restraints  are  little  felt.  It  i& 
the  popular  opinion  that  a  man  gets  along  better  after 
marriage  than  before.  As  the  country  grows  older  and 
more  densely  populated,  he  sees  that  he  can  not  pro- 
vide for  a  family  in  the  way  he  regards  necessary,  and 
defers  marriage  until  he  has  learned  a  trade,  or  ac- 


THE    LAW    OF   THE   INCREASE    OF   POPULATION.       127 

cumulated  a  little  money,  or  finished  his  studies  and 
established  himself  in  his  profession,  or  got  a  start  in 
business,  or  secured  a  position  which  will  enable  Jhim 
to  support  a  wife  and  family.  All  this  may  take  ten 
years.  The  unfortunate  feature  of  this  influence  is 
that  it  acts  to  prevent  the  increase  of  the  better  classes 
of  the  people,  and  leaves  the  gap  to  be  filled  by  the 
descendants  of  the  worthless  and  the  ignorant.  Those 
who  are  satisfied  to  live  and  bring  up  a  family  in 
squalor  marry  young,  so  that  the  great  increase  in 
population  in  every  country  comes  from  them.  It 
would  be  better  for  the  future  if  the  conditions  could 
be  reversed ;  if  it  were  the  intelligent,  the  enterpris- 
ing, and  the  best  element  among  the  people  which 
marries  young,  and  if  the  greater  portion  of  the  next 
generation  could  be  their  descendants  instead  of  those 
of  the  reckless,  the  shiftless,  and  the  ignorant.  If 
there  were  no  pressure  of  population  upon  subsistence, 
it  would  be  so.  If  every  man  felt  able  to  bring  up  his 
family  in  what  he  regards  as  a  condition  of  decency,, 
early  marriages  would  be  the  rule.  This  was  the  con- 
dition of  affairs  seventy-five  or  a  hundred  years  ago. 
The  energetic  young  man  believed  in  his  ability  to- 
make  a  living  which  his  neighbors  would  regard  as  re- 
spectable, and  marriages  among  the  better  class  of 
people  were  as  early,  and  families  as  large,  as  among; 
the  others. 

The  opening  of  new  employments  to  women  ha& 

had  a  very  decided  effect  in  preventing  or  delaying 

marriages  among  the  better  classes.     Many  a  woman 

now  supports  herself  who  a  hundred  years  ago  would 

9 


128  POPULATION. 

have  married  before  she  was  eighteen,  because  mar- 
riage was  the  only  avenue  open  to  her.  If  unmarried, 
she  remained  at  her  father's,  or  with  relatives,  in  a 
position  thought  inferior  to  the  married  state.  If  she 
were  compelled  to  earn  her  own  living,  domestic  ser- 
vice was  almost  the  only  employment  open  to  her.  All 
this  has  been  changed.  Women  have  almost  a  monop- 
oly of  teaching  in  the  common  schools.  They  have 
become  telegraph  operators,  stenographers,  typewriters, 
clerks  and  saleswomen,  and  are  practicing  law  and 
medicine.  A  still  larger  number  are  at  work  in  fac- 
tories, and  nearly  every  employment  which  woman 
chooses  to  enter  is  now  open  to  her.  This  must  have 
an  influence  on  marriage.  Fewer  women  are  likely  to 
marry  merely  for  a  home.  Women  who  are  able  to 
support  themselves  with  the  respect  of  society  are 
not  likely  to  marry  except  from  choice.  The  effect  is 
Tather  to  defer  marriage  for  a  few  years  than  to  pre- 
vent it,  although  fewer  marriages  take  place  than 
would  occur  under  other  conditions. 

Public,  opinion  has  much  to  do  with  the  number  of 
marriages.  In  many  instances  this  has  been  thrown 
on  the  side  of  early  marriages,  and  men  were  led  to 
feel  that  he  who  brought  up  a  family  rendered  a  ser- 
vice to  his  country.  Such  a  public  opinion  must  lead 
to  somewhat  earlier  marriages,  on  the  average,  since 
one  will  take  more  risks  of  being  able  to  provide  for 
the  future.  Where  public  opinion  is  on  the  other 
side,  and  says  that  one  has  no  right  to  marry  and  bur- 
den society  with  a  family  which  he  will  not  be  able  to 
support,  it  must  tend  to  make  even  the  reckless  more 


THE   LAW    OF   THE    INCREASE    OF   POPULATION.       129 

prudent.  The  less  intelligent  members  of  the  commu- 
nity, those  who  would  never  read  a  book  on  Political 
Economy,  are  more  likely  to  be  reached  by  this  in- 
fluence than  by  any  other.  In  fact,  public  opinion  is 
almost  the  only  force  which  acts  to  defer  marriages 
among  the  ignorant  and  the  lower  classes  of  society. 
Their  death  rate,  however,  owing  to  unsanitary  sur- 
roundings, is  abnormally  high. 

An  attempt  has  been  made  in  some  countries  to  reg- 
ulate marriages  by  law,  and  to  refuse  permission  to 
marry  unless  some  satisfactory  evidence  of  ability  to 
support  a  family  is  given.  The  effect  of  such  laws,  as 
might  have  been  expected,  has  always  been  an  increase 
of  the  number  of  illegitimate  births,  and  of  immo- 
rality. Such  laws  do,  however,  act  as  a  check  on  the 
increase  of  population. 

Other  legal  prohibitions  and  regulations  have  often 
had  a  very  decided  effect  on  the  increase  of  popula- 
tion. The  requirement  that  one  must  serve  in  the 
army  until  a  certain  age  tends  to  defer  marriage. 

Poor  Laws,  especially  laws  where  relief  is  given 
•outside  of  almshouses,  have  the  opposite  effect  of 
increasing  the  population.  We  have  seen  that  the 
fear  of  want  and  starvation  is  almost  as  powerful  a 
check  as  starvation  itself;  but  where  one  knows 
that  neither  he  nor  his  children  will  be  allowed  to 
starve,  he  trusts  to  luck  and  the  poor  laws.  It  is 
true  there  is  an  independence  which  prefers  star- 
vation to  charity ;  but  this  independence  is  not  pos- 
sessed by  all,  and  is  very  easily  weakened.  Once  let 
a  man  be  driven  by  distress  to  accept  aid,  and  his 


130  POPULATION. 

independence  is  broken ;  he  soon  comes  to  seek  for 
aid,  and  to  prefer  charity  to  labor.  It  is  in  the  cities 
and  old  countries,  where  population  is  dense,  that  we 
find  so  many  sad  instances  of  this  kind. 

How  much  crime  has  to  do  as  a  check  to  the 
increase  of  population  can  not  well  be  determined. 
In  China  population  is  almost  held  stationary  by  the 
murder  of  infants,  especially  females ;  and  the  ex- 
posure and  murder  of  infants  was  common  among 
many  nations  of  ancient  times.  Crime,  including  the 
murder  of  infants,  and  lesser  crimes  and  vices,  has 
undoubtedly  been  a  powerful  check  to  the  increase  of 
population  ;  but  the  extent  of  its  effect  can  be  only 
guessed. 

Enough  has  certainly  been  said  to  explain  the 
meaning  of  the  statement,  "  tendency  of  population  to 
increase,  and  to  double  as  often  as  once  in  every 
twenty-five  years."  Enough  of  the  causes  which 
check  this  natural  increase — war,  pestilence,  famine, 
overcrowding,  crime,  and  the  delay  of  marriage — 
have  been  enumerated  to  show  the  power  of  the  in- 
fluences which  have  tended  to  prevent  the  increase  of 
population  in  the  past.  If  these  causes  had  not  acted, 
we  may  be  sure  that  starvation  would  have  effected 
the  same  result.  It  would  seem  that  no  one  could 
argue  that,  because  population  has  not  increased  at  a 
certain  rate  since  the  beginning  of  history,  it  has  no 
tendency  to  increase  at  that  rate.  Had  there  been  no 
checks  to  their  increase,  a  single  thousand  people 
would  have  become  1,000,000,000,000,000  in  a 
thousand  years.  We  know  that  population  will  not 


THE   LAW   OF   THE   INCREASE   OF   POPULATION.       131 

increase  at  the  rate  of  a  favorable  new  country, 
because,  even  with  all  the  improvements  and  discov- 
eries that  can  be  made,  there  will  be  no  room  for  it. 

The  law  of  the  rapid  increase  of  population  is  in 
harmony  with  all  other  laws  of  nature.  Nature  is 
very  prolific,  and  provides  abundantly  for  the  increase 
of  all  living  things.  If  the  law  of  population  were 
different,  man  would  be  an  exception  to  every  other 
living  thing  upon  the  earth.  With  the  world's 
history  of  war  and  crime  and  cruelty,  if  there  had 
not  been  this  tendency  of  population  to  increase 
with  startling  rapidity,  whenever  it  had  the  oppor- 
tunity, the  race  might  have  become  extinct. 

The  fact  that  population  increases  in  geometrical 
progression  has  been  the  occasion  for  many  attacks 
on  Malthus.  It  is  not  probable  that  he  himself  at- 
tached much  importance  to  this  particular  form  of 
statement,  and  many  modern  political  economists  have 
been  inclined  to  state  the  truth  in  some  other  way. 
But  the  fact  that  every  increase  in  population  becomes 
the  basis  for  further  increase  makes  it  geometrical 
progression.  This  is  what  distinguishes  geometrical 
progression  from  arithmetical.  The  rate  of  increase 
may  change ;  and  the  tendency  to  increase  has  been 
limited  in  the  past  by  the  various  checks  described ; 
some  of  the  most  cruel  we  may  hope  will  soon  cease 
to  act. 

The  natural  rate  of  increase  of  population  would 
doubtless  be  found  to  be  somewhat  different  among 
different  races  and  peoples ;  but  there  is  probably  no 
•civilized  race  which  would  not  double  in  twenty-five 


132  POPULATION. 

years,  or  less,  were  all  checks,  such  as  war,  cruelty,, 
pestilence,  etc.,  removed ;  and  were  there  abundant 
room  in  the  country,  with  sanitary  surroundings,  and 
opportunity  for  every  honest  laborer  to  support  a 
family  in  respectability. 

It  is  not  probable,  however,  that  Malthus  meant 
to  lay  any  particular  stress  on  any  assumed  rate  of 
increase.  He  selected  twenty-five  years  for  illustration 
because  it  is  a  round  number,  and  he  believed  that 
iistory  had  shown  that  the  tendency  is  to  double  in 
shorter  periods.  It  would  certainly  be  unfortunate 
for  us  to  lay  much  stress  on  any  particular  rate  of  in- 
crease. The  important  fact  is  the  tendency  of  any 
people  to  fill  rapidly  any  country  where  there  is  room 
for  them.  There  can  be  no  doubt  that,  if  other  in- 
habitants were  swept  away,  a  thousand  people  of  any 
civilized  nation  would  very  soon  fill  the  whole  earth. 
This  tendency  is  fortunate,  though  it  often  entails 
suffering*  But  it  forces  on  us  the  question,  What 
people  are  to  be  the  ancestors  of  the  people  of  the 
future — the  intelligent  or  the  ignorant?  the  moral  or 
the  degraded? 

There  has  been  another  attempt  to  break  the  force 
of  the  law  of  the  increase  of  population,  which  should 
be  treated  with  more  respect.  It  has  been  assumed 
that  the  tendency  of  population  to  increase  decreases 
with  the  age  of  the  world,  or  of  any  nation  or  people, 
and  with  the  advance  of  civilization ;  so  that  it  ap- 
proaches the  point  where  the  death  rate  and  the  birth 
rate  will  be  equal.  This  assumption — for  it  is  a 
pure  assumption — has  naturally  arisen  from  the  fact 


THE  LAW   OF  THE   INCREASE   OF  POPULATION.      133 

that  the  rate  of  increase  in  some  countries  has  dimin- 
ished through  the  action  of  deferred  marriages,  and 
other  checks,  which  do  not  show  any  weakening  of  the 
natural  tendency  of  population  to  increase  as  rapidly 
as  ever,  under  favorable  circumstances.  The  best 
example  of  a  population  nearly  stationary  is  that  of 
France.  It  is  stated  that  in  the  provinces,  where  the 
land  is  divided  into  small  holdings,  young  people  as  a 
rule  do  not  marry  until  there  is  a  place  for  a  new 
family.  They  wait  until  a  holding  is  vacated  by 
death,  or  some  place  filled  by  people  in  their  station 
in  life  is  opened ;  so  that  the  population  is  practically 
kept  stationary  through  deferred  marriages.  How 
much  crime,  especially  in  the  cities  of  France,  has  to 
do  with  keeping  the  population  within  its  present 
limits,  it  is  impossible  to  say.  As  it  becomes  more 
dense  than  can  be  supported  with  the  greatest  comfort 
to  all,  a  great  variety  of  checks  come  into  play  to 
prevent  its  increase.  The  fear  of  starvation,  or  of 
want,  or  insufficiency,  or  even  inability  to  live  in  the 
manner  which  one's  acquaintances  will  regard  as  re- 
spectable, is  often  as  potent  an  influence  as  starvation 
itself.  But  this  does  not  go  to  show  that  the  natural 
tendency  is  weakened  in  any  degree,  only  that  other 
influences  have  come  into  play.  The  French  people 
would  certainly  fill  this  earth  in  less  than  two  hundred 
years,  were  all  other  nations  suddenly  destroyed  by  a 
flood. 

That  the  tendency  of  population  to  increase  is  not 
weakened  is  shown  by  the  knowledge  we  all  have  of 
society  and  history.  Who  can  doubt  that  if  a 


134  POPULATION. 

thousand  Englishmen,  Germans  or  Frenchmen  were 
placed  in  an  unoccupied  country,  where  more  men  are 
as  desirable  as  they  were  in  the  early  days  of  this  re- 
public, where  the  position  of  each  is  not  far  from 
equal,  and  there  is  no  doubt  of  satisfactory  provision 
for  all,  the  increase  of  population  would  be  as  rapid 
as  in  the  first  fifty  years  of  the  United  States  ?  Im- 
agine society  in  a  state  of  socialism,  and  the  state  to 
agree  to  provide  for  all,  and  the  children  of  all,  does 
any  one  doubt  that  the  population  would  increase  as 
fast  as  in  the  early  days  of  this  republic  ? 


CHAPTER  VI. 

APPLICATIONS  OF  THE  LAW  OF  THE  INCREASE  OF 
POPULATION. 

1.  EMIGRATION. — The  most  natural  remedy  for  an 
overpopulated  country  is  emigration.  It  is  by  this 
means  that  the  whole  earth  has  been  peopled.  Men 
go  West,  where  land  is  more  abundant,  where  there  is 
more  room  for  new  families.  England  has  sent  her 
colonies  all  over  the  world  ;  she  laid  the  foundation 
of  the  United  States,  and  is  now  filling  Australia  and 
New  Zealand.  So  long  as  there  is  unoccupied  land,  or 
land  occupied  by  savages,  it  may  be  peopled  from  the 
older  nations  of  the  world.  The  new  country  is  for- 
tunate if  the  emigration  is  of  the  best  blood  of  the  old, 
as  happened  with  this  country  before  the  Revolution. 
Yet  when  even  the  worst  class  of  people  are  selected, 
they  seem  to  do  better  than  at  home.  New  surround- 
ings, more  room,  the  encouragement  to  exertion  wliich 
more  room  brings,  appear  to  build  up  the  strength  and 
character  of  a  majority  of  the  emigrants ;  and  their 
descendants  are  likely  to  show  a  still  greater  advance. 
We  can  not  expect  them  to  equal  those  from  better 
stock,  but  they  appear  to  make  more  progress  than  in 
the  country  whence  they  came. 

Countries  suitable  for  settlement  are,  however,  fill- 
ing rapidly.  Europe  and  Asia  have  as  many  people 
as  they  can  support  to  the  best  advantage  in  the  pres- 

(135) 


136  POPULATION.        f- 

ent  state  of  the  world's  progress.  England  is  now  en- 
deavoring to  settle  the  country  north  of  the  United 
States ;  but  the  cold  northern  regions  can  support  only 
a  sparse  population.  South  America  is  largely  peo- 
pled by  men  of  lower  civilization,  many  of  them  de- 
scended from  Indians.  With  the  methods  employed 
by  modern  European  nations  and  the  United  States,. 
that  country  would  give  room  for  a  vast  population. 
The  greater  portion  of  South  America  lies  in  the  tor- 
rid zone,  which  is  not  so  suitable  for  settlement.  The 
southern  portion,  especially  that  occupied  by  the  Ar- 
gentine Republic,  appears  to  offer  the  best  opportunity 
of  any  country  in  the  world,  for  the  surplus  popula- 
tion of  other  nations,  but  even  this  land  is  limited. 
Australia,  by  reason  of  the  climate,  offers  little  land 
for  settlement  except  the  coast  line  and  the  northern 
portions.  Only  a  very  few,  except  the  original  inhabit- 
ants, can  live'in  the  interior.  There  are  three  million 
Englishmen  on  the  island  —  about  the  population  of 
the  United  States  before  the  Revolutionary  War  — 
and  they  will  fill  it  with  people  in  a  short  time.  Of 
Africa,  the  northern  part,  except  a  narrow  strip  on 
the  sea,  is  a  barren  desert ;  Egypt  is  full ;  the  southern 
portion  of  the  continent  is  in  the  possession  of  the 
English  and  Dutch;  the  central  portion  has  re- 
cently been  opened  by  explorers,  but  whether  the  in- 
tense  heat  will  permit  any  considerable  immigration,  is 
still  an  open  question.  Civilization  will  result  in  a 
great  increase  of  the  native  population,  but  it  is  doubt- 
ful if  Africa  offers  a  place  for  any  extensive  emigra- 
tion from  Europe. 


APPLICATIONS    OF    THE    LAWS    OF    POPULATION.      13T 

A  survey  of  the  world  shows  very  little  land  avail- 
able for  emigration  from  other  countries.  Most  na- 
tions are  rapidly  coming  to  understand  that  all  room 
will  soon  be  filled  by  their  own  people,  and  prefer  to 
keep  it  for  their  descendants  rather  than  for  foreigners. 
Every  great  country  in  the  Old  World  is  seeking  for  a 
place  to  plant  colonies.  China  would  be  glad  to 
take  Australia,  but  the  people,  backed  by  English  iron- 
clads, absolutely  refuse  them  admission.  They  under- 
stand that  they  have  no  more  land  than  they  need  for 
their  own  children.  European  countries  have  been 
sending  their  people  to  the  United  States,  but  it  is  not 
to  be  supposed  that  public  opinion  here  will  tolerate 
this  much  longer.  Each  nation  must  soon  come  to 
take  care  of  its  own  people;  and  emigration  as  a 
check  on  the  rapid  increase  of  population  will  soon 
be  a  thing  of  the  past. 

EEFUSAL  TO  PERMIT  IMMIGRATION. — Understand- 
ing the  power  of  any  people  to  fill  its  own  country  in 
a  comparatively  short  space  of  time,  it  would  seem 
that  the  instinct  of  self-preservation  would  cause  an 
absolute  prohibition  of  immigration  long  before  the 
point  of  diminishing  returns  is  reached.  It  is  not 
strange  that  a  new  country,  such  as  the  United  States 
a  hundred  years  ago,  or  Australia  at  the  present  time, 
with  land  unoccupied,  should  desire  the  immigration  of 
people  lilce  themselves  from  the  country  from  which 
they  came.  But  that  they  should  desire  this  after 
they  have  become  numerous  enough  to  reap  all  the 
advantages  of  a  large  population,  is  something  to  excite 
wonder.  It  is  partly  accounted  for  by  the  slowness- 


138  POPULATION. 

with  which  ideas  permeate  the  mass  of  the  people  in 
ordinary  times,  and  partly  by  the  fact  that  a  few 
persons  can  make  a  great  deal  of  money  out  of  such 
immigration  at  the  expense  of  the  entire  nation.  It 
is  through  these  men,  and  their  friends  and  supporters, 
that  ideas  favorable  to  the  admission  of  immigrants 
are  industriously  circulated. 

WHO  SHALL  PEOPLE  THIS  LAND  ? — The  most  im- 
portant deduction  from  the  law  of  the  last  chapter  is 
that,  since  the  descendants  of  a  very  few  thousand 
people  are  able  to  fill  any  country  in  a  comparatively 
short  period,  the  future  of  the  world  depends  on  the 
nations  or  classes  of  people  from  which  posterity  is  to 
come.  It  is  particularly  fortunate  that  England  rather 
than  China  has  been  the  colony-planting  nation,  press- 
ing into  new  lands  and  filling  them  with  the  English 
rather  than  the  Chinese  race.  It  was  also  fortunate 
for  this  nation  that  our  early  immigration  came  from 
the  English,  the  German  and  the  Irish  races,  rather 
than  from  Asia.  The  present  immigration  is  one  of 
the  most  unfortunate  that  could  exist.  With  a  few 
desirable  immigrants,  we  are  receiving  the  scum  of 
Europe — criminals,  paupers,  and  diseased  persons, 
which  the  older  nations  are  willing  to  pay  something 
to  get  rid  of.  There  is  a  large  emigration  from 
Italy,  Austria  and  Russia.  The  persecution  of  the 
Russian  Jews  has  driven  numbers  of  them  to  our 
shores — a  very  undesirable  class — not  so  much  because 
they  are  Jews,  as  because  of  their  ignorance  and 
Iiabits  of  life.  It  is  not  even  the  addition  of  this 
half  million  people  annually  to  our  population  that 


APPLICATIONS    OF   THE   LAWS    OF   POPULATION.     •139f 

is  our  greatest  danger;  it  is  the  fact  that  it  will 
be  their  children,  rather  than  the  children  of  those 
who  have  made  the  United  States  what  it  is,  that  will 
people  this  land  in  the  future. 

That  there  may  be  no  doubt  about  this,  let  us  see 
what  "  room  for  population  to  increase  "  implies.  In 
the  struggle  for  existence  it  is  not  the  best  plants,  the 
most  desirable,  that  succeed ;  it  is  usually  the  weeds 
that  overrun  the  ground.  The  more  desirable  plants 
need  external  help.  They  do  not  survive  on  the  laissez 
faire,  or  let  alone,  principle.  The  farmer  has  a  con- 
tinual fight,  all  the  long  summer,  to  raise  his  crop. 
Weeds  crowd  out  the  corn.  The  farmer  uproots  them, 
fights  them,  keeps  them  out  of  his  field,  to  give  hi& 
corn  a  chance  to  take  possession  of  the  ground.  The 
question  is  whether  the  weeds  or  the  corn  shall  have 
the  land.  Free  competition  always  gives  it  to  the 
weeds.  Every  farmer  knows  this,  and  keeps  the  weeds 
out.  When  Darwin  said  "  the  survival  of  the  fittest  " 
he  had  no  reference  to  the  morally  fittest,  but  to  plants 
and  animals  which  could  best  live  in  the  conditions 
about  them.  The  pest  of  the  Canada  thistle  survives, 
because  it  is  better  fitted  to  the  conditions  than  is 
useful  grain.  Let  the  field  alone,  and  it  will  soon 
be  covered  with  Canada  thistles,  with  no  grain  to  be 
seen ;  and  the  seeds  of  the  weeds  will  be  borne  by 
the  wind  to  stock  other  fields,  and  crowd  out  other 
grain.  Vermin  multiply,  because  fitted  to  the  con- 
ditions around  them.  Some  plants  can  stand  the  cold  ; 
others,  perhaps  more  desirable,  are  killed  by  it.  The 
Chinaman  can  live  on  less  than  an  American,  and 


140  POPULATION. 

therefore  fits  the  conditions  of  a  crowded  population. 
When  the  American  comes  in  competition  with  him, 
he  must  either  starve  or  live  as  these  Chinese  live; 
assuming  that  there  are  Chinese  enough  to  make  the 
competition  real.  Many  of  us  have  unconsciously 
transferred  Darwin's  phrase,  "  survival  of  the  fittest," 
to  the  morally  fittest,  using  it  in  a  sense  in  which  it  is 
utterly  false,  and  which  he  never  intended. 

The  number  of  people  which  a  land  will  sustain 
depends  on  how  they  live,  as  well  as  on  how  much 
they  are  able  to  produce.  Take  the  American 
mechanic,  farmer  or  merchant ;  he  desires  to  live  de- 
cently and  with  what  he  regards  as  necessary  comforts. 
He  thinks  it  would  have  been  better  not  to  have  been 
born  than  to  live  on  a  lower  scale.  He  wants  a  house 
for  his  family,  or,  if  in  a  city,  room  enough  for 
privacy.  He  wants  sanitary  surroundings,  conditions 
for  a  fair  degree  of  cleanliness,  comfortable  clothing, 
schools  for  his  children,  and  some  intellectual  enter- 
tainment. Let  one  see  what  the  New  England  factory 
girls  demanded,  and  how  they  used  the  little  money 
received  as  wages!  Compare  such  lives  with  the 
Chinese  quarter  of  California,  with  Italian  dagoes,  and 
with  the  quarters  occupied  chiefly  by  the  poorer  immi- 
grants in  New  York  and  Chicago.  It  costs  something 
to  live  on  the  American  plan.  The  poorest  of  our 
people  live  in  a  way  that  is  princely  compared  to  many 
of  the  poor  of  the  Old  World.  Now,  when  it  comes 
to  a  struggle  for  existence,  those  who  can  live  the 
cheapest,  and  at  the  same  time  do  the  work,  crowd  out 
those  who  must  live  on  a  better  plan,  if  they  live  at 


APPLICATIONS    OF   THE   LAWS    OF   POPULATION.      141 

all.  Especially  is  this  true  of  a  country  as  well  settled 
as  the  United  States  has  come  to  be,  where  the 
Resources  of  Nature,  and  especially  the  land  of  the 
country,  are  in  the  hands  of  private  owners ;  and  where 
the  great  mass  of  the  people  are  more  and  more  com- 
pelled to  work  for  wages.  It  is  not  a  question  of  how 
much  can  be  produced ;  it  is  rather  a  question  of 
what  one  can  get  the  work  done  for.  The  Chinaman, 
living  as  he  does,  regards  the  wages  of  an  ordinary 
American  workman  as  princely,  and  can  afford  to 
accept  pay  on  which  a  self-respecting  American  family 
would  actually  starve.  We  would  think  that  it  would 
be  better  for  him  and  his  children  to  starve  than  to 
adopt  the  Chinese  method  of  life.  Let  Chinese  im- 
migration be  free,  and  enough  of  the  three  hundred 
and  fifty  millions  come  over  to  take  the  place  of  the 
American  workman,  and  what  is  he  to  do  ?  It  is  easy 
to  see  what  the  best  of  them  will  do.  They  will  not 
marry,  for  one  thing.  Even  now  such  a  man  defers 
marriage  until  he  sees  a  prospect  of  being  able  to  sup- 
port a  family.  As  a  single  man  he  may  compete  with 
Chinamen,  but  the  children  of  Americans  (except  of 
the  wealthy  class)  will  become  fewer  each  year.  The 
Chinese  have  hardly  begun  to  bring  their  families  here 
as  yet,  but  if  they  had  a  real  footing  they  could  sup- 
port a  family  with  the  wages  that  would  scarce  keep 
an  unmarried  American  in  decency.  The  numerous 
descendants  of  the  Chinaman  would  promptly  fill  the 
gap  caused  by  the  lack  of  children  of  Americans. 
With  free  immigration  from  China,  it  would  be  but  a 
few  generations  before  we  should  see  the  great  mass 


142  POPULATION. 

of  the  people  of  this  land  descendants  of  Chinese  or 
other  immigrants.  Good  men  lament  the  small  increase 
of  the  old  American  population,  and  think  there  is 
something  wrong  in  the  fact  that  men  of  American 
descent  do  not  marry  earlier,  and  that  there  are  so 
few  children  of  the  old  American  stock;  but  their 
lamentations  will  not  alter  the  fact.  There  is  some- 
thing wrong,  and  it  is  that  there  is  110  room  for  the 
increase  of  Americans  ;  that  ignorant  and  foolish  peo- 
ple have  invited  the  degraded  of  every  nation  under 
the  sun  to  come  and  fill  up  the  land,  instead  of  pre- 
serving it  for  the  descendants  of  those  who  founded 
and  made  this  nation. 

What  has  been  said  of  the  Chinese  is  true  of  nearly 
all  of  our  present  immigration,  which,  it  is  to  be  re- 
membered, is  of  an  entirely  different  character  from 
what  it  was  twenty  years  ago.  In  some  respects  Rus- 
sian, Italian,  and  immigration  from  some  other  parts 
of  Europe,  is  even  worse  than  that  of  the  Chinese. 
They  are  near  akin  to  us  in  race,  and  if  not  too  nu- 
merous are  more  likely  to  assimilate  with  us ;  but  the 
danger  of  the  crowding  out  of  the  old  American  pop- 
ulation is  still  greater  than  from  an  equal  number  of 
Chinese.  The  European  immigrants  bring  their  fami- 
lies with  them ;  their  children  are  numerous,  and  al- 
though they  expect  better  wages  than  the  Chinese, 
their  competition  tends  to  degrade  the  American  la- 
borer. He  can  not  live  as  they  do.  He  ought  not  to 
live  in  that  way.  The  only  chance  he  has  in  compe- 
tition with  them  is  in  the  fact  they  have  so  much  larger 
families  to  support  than  he ;  and  this  means  that  they 


APPLICATIONS    OF    THE    LAWS    OF    POPULATION.      143 

are  crowding  his  descendants  out,  and  that  their  large 
families  are  to  take  the  land.  There  is  no  room  for 
the  American  population  to  increase ;  there  is  room  for 
that  -of  the  European  immigrant.  This  tendency  is 
somewhat  affected  by  the  higher  death  rate  of  the  for- 
eigner, but  nevertheless  the  rate  of  his  increase  is  even 
now  far  greater  than  that  of  the  American  people. 
The  very  rich  are  exempted  from  these  conditions,  be- 
cause the  question  of  providing  for  a  family  need  not 
trouble  them.  It  is  the  great  bulk  of  the  sturdy 
American  people,  the  best  material  to  make  a  nation 
out  of  that  the  world  has  ever  seen,  who  are  slowly  be- 
ing replaced  by  the  lowest  people  of  Europe  and  their 
descendants.  The  foreigner  can  live  in  harder  condi- 
tions, on  poorer  food,  and  in  more  filthy  surroundings. 
There  is  no  doubt  that  the  people  of  any  nation  will 
rapidly  increase  where  there  is  room  for  them,  but  room 
is  a  relative  term.  There  is  room  only  for  a  certain 
number  of  hills  of  corn  to  an  acre,  if  the  crop  is 
brought  to  its  greatest  perfection.  The  farmer  will  per- 
haps plant  the  hills  not  less  than  four  feet  apart,  each 
way.  This  may  seem  to  be  a  waste  of  land,  but  it  is 
all  the  corn  there  is  really  room  for.  There  is  plenty 
of  room  for  weeds,  however,  between  the  rows ;  they 
will  grow  close  together.  Let  them  alone,  and  they 
will  kill  the  corn.  Families,  like  corn,  need  a  little 
space  between.  The  highest  state  of  civilization  and  of 
manhood  requires  nourishing  food,  comfortable  cloth- 
ing, and  many  things  which  can  be  had  only  where 
population  is  not  too  dense.  But  when  there  are  all 
the  people  who  can  subsist  in  the  manner  in  which  it  is 
10 


144  POPULATION. 

desirable  that  the  race  should  live,  there  is  plenty  of 
room  for  Chinese,  the  Italian  and  the  Russian.  He 
can  live  between  the  rows  of  corn,  and  pack  his  chil- 
dren into  a  Chinese  quarter,  or  an  Italian  tenement 
house.  Let  him  alone,  and  his  descendants  will  crowd 
out  the  American.  There  is  room  for  a  hundred  of 
him  where  there  is  room  for  one  American  family. 

The  most  important  application  of  the  law  of  the 
increase  of  population,  then,  is  that,  so  far  as  we  are 
able  to  control  the  matter,  room  should  be  given  the 
best  nations  to  expand,  that  the  earth  may  be  peopled 
by  the  best  rather  than  the  poorest.  The  people  of 
Australia  and  New  Zealand  understand  this  better  than 
we.  While  there  is  at  present  room  for  more  people 
there,  they  propose  to  save  the  land  for  their  own  de- 
scendants. The  same  course  should  be  at  once  adopted 
by  the  United  States.  Independent  of  the  character 
of  the  immigrants,  the  people  of  this  nation  have  an 
interest  in  preserving  the  United  States  for  their  chil- 
dren, and  children's  children.  There  is  no  people  in  the 
world  from  whom  a  race  of  high  social  order  is  so  like- 
ly to  come  as  from  us.  To  abandon  this  land  to  the 
people  whom  Europe  is  anxious  to  get  rid  of,  is  a  crime 
against  the  human  race. 

But  what  about  the  increase  of  population  within  a 
nation  itself  ?  In  China,  India  and  Russia,  population 
is  kept  within  its  present  limits  partly  by  starvation ; 
not  by  starvation  each  year  in  every  part  of  the  coun- 
try, but  by  frequently  recurring  famines  in  extensive 
districts.  In  India,  population  was  formerly  kept  with- 
in its  old  limits  largely  by  wars  and  the  cruelty  of  the 


APPLICATIONS    OF   THE   LAWS    OF   POPULATION.      145 

upper  classes.  With*  the  settled  government  of  the 
English  this  cause  has  been  removed,  and  population 
presses  harder  on  subsistence,  notwithstanding  the 
great  increase  in  the  productiveness  of  the  country,  un- 
der English  rule.  People  seldom  die  of  actual  hunger. 
Insufficient  food  leads  to  disease  and  death  from  other 
•causes. 

In  the  United  States  there  has  been  a  very  decided 
<;heck  to  the  increase  of  the  better  classes  through  a 
deferring  of  marriage,  because  of  the  unwillingness  of 
men  to  marry  until  they  can  support  a  family,  and  be- 
cause of  the  opening  of  employments  to  women.  If  this 
<?heck  could  reach  the  criminal,  the  drunken,  and  the 
ignorant  classes,  it  would  be  to  the  advantage  of  the 
future.  If  we  could  select  out  the  worthless  and  semi- 
worthless,  and  induce  them  to  defer  marriage,  society 
would  be  the  gainer.  Unfortunately,  this  check  acts 
on  precisely  the  people  whose  posterity  should  fill  the 
land.  It  is  the  intelligent,  the  prudent,  the  men  and 
women  who  wish  to  live  in  decency,  whose  children  are 
the  hope  of  the  country,  that  are  now  deferring  mar- 
riage. Every  Bible  reader  knows  how  much  honor  was 
put  on  marriage,  and  a  family,  among  the  Israelites. 
The  Lord  had  chosen  a  race  and  nation  for  a  peculiar 
purpose,  and  that  they  might  become  numerous,  pecu- 
liar honor  was  given  to  a  numerous  family.  The  fact 
that  it  is  the  tendency  of  population  to  increase  so  rap- 
idly, that  the  descendants  of  those  who  are  a  curse  to 
society  tend  to  increase  in  geometrical  progression, 
makes  it  all  the  more  necessary  that  the  moral  and  the 
intelligent  should  hold  the  world  against  them.  There 


146  POPULATION. 

may  be  too  many  people  in  some  parts  of  the  world,  but 
they  are  not  of  the  right  sort.  If  the  Bible  account 
of  the  flood  means  anything,  it  means  that  the  Lord 
destroyed  a  race  because  unworthy  to  people  the  world 
of  the  future.  The  future  of  this  nation  depends  on  the 
number  of  the  descendants  of  the  intelligent  and  moraL 
classes. 

It  is  not  easy  to  do  anything  to  secure  the  possession 
of  the  future  by  the  descendants  of  the  better  classes. 
Any  suggestion  of  the  deferring  of  marriage  reaches 
precisely  the  class  who  ought  to  marry  as  young  as 
possible,  and  from  whose  children  the  world  has  the 
most  to  hope.  No  one  who  ought  to  defer  marriage 
reads  a  book  on  Political  Economy.  It  has  been 
found,  in  England,  that  the  indiscriminate  giving  of 
outdoor  relief  to  paupers  has  had  the  effect  of  sup- 
porting large  families,  whose  children  continued  to  be 
a  burden  on  the  state  after  they  were  grown  up. 
Paupers  of  the  permanent  class,  that  is,  those  who 
require  more  than  temporary  relief,  should  be  provided 
for  in  public  institutions,  where,  of  course,  marriage 
should  not  be  permitted. 

Outside  of  actual  paupers  there  seems  to  be  very 
little  that  can  be  done  toward  controlling  the  increase 
of  population  within  a  nation  itself,  unless  it  be  to  en- 
courage early  marriages  and  consequent  larger  families 
among  the  well-to-do  and  the  intelligent  and  educated 
classes,  that  from  them  may  come  a  larger  portion  of 
the  people  of  the  future.  Any  attempt  to  suppress- 
the  increase  of  population  is  sure  to  act,  if  it  acts  at 
all,  on  the  more  intelligent  and  prudent  people,  whose- 


APPLICATIONS    OF   THE    LAWS    OF    POPULATION.      147 

descendants  the  world  greatly  needs.  The  attempt  to 
prevent  the  marriage  of  those  unable  to  support,  or 
unfitted  to  care  for,  a  family,  has  been  tried  to  some 
extent  in  various  countries ;  but,  as  might  have  been 
expected,  results  in  illegitimate  births,  and  lowering 
the  morals  of  the  people,  though  it  undoubtedly  has 
had  some  effect  in  diminishing  the  rate  of  increase  of 
this  class  of  the  population. 

By  the  education  of  the  children  of  the  masses  in 
the  common  schools,  we  make  them  more  fit  to  be  the 
fathers  and  mothers  of  families.  The  natural  check 
of  deferring  marriage  will  also  reach  them  sooner ;  so 
that  instead  of  marriage  being  deferred  by  the  best 
class  of  citizens,  it  will  be  more  likely  to  be  put  off  a 
year  or  two  longer  by  all.  It  is  only  a  question  of 
what  families  shall  fill  the  land.  Shall  it  be  the  most 
intelligent,  those  from  a  long  line  of  good,  honest,  hard- 
working, intelligent  ancestry,  the  educated,  the  well-to- 
do  ;  or  the  ignorant,  the  vicious,  and  those  with  weak 
characters,  or  unable  to  support  themselves  ? 


BOOK  III. 

OWNERSHIP  ASTD   CONTROL,  OF 
THE  RESOURCES. 


BOOK  in. 

OWNERSHIP  AND  CONTROL  OF  THE   RESOURCES  FOR 
THE  SATISFACTION  OF  WANTS. 

CHAPTER      I.     PRIVATE  PROPERTY  OR  SOCIALISM,    .     .        151 

CHAPTER  II.  THE  OWNERSHIP  AND  CONTROL  OF  LA- 
BOR,   160 

CHAPTER  III.     THE  OWNERSHIP  AND   CONTROL  OF  THE 

RESOURCES  OF  NATURE, 165 

.CHAPTER  IV.  THE  OWNERSHIP  AND  CONTROL  OF  THE 
RESOURCES  PRODUCED  BY  HUMAN  IN- 
DUSTRY,   181 

CHAPTER    V.     CONTROL  OF  SOCIETY, 189 

Individualism  and  Socialism. 


BOOK  III. 

OW^EBSHIP  AOT)  CONTROL, 

OF  THE  RESOURCES  FOR  THE  SATISFAC- 
TION OF  WANTS. 

CHAPTER  I. 

PRIVATE  PROPERTY  OR  SOCIALISM? 

Who  shall  control  the  vast  resources  for  the  satis- 
faction of  human  wants  ?  The  first  question  .  that 
meets  us  to-day  is,  Private  Property  or  Socialism  ?  It 
would  not  be  easy  to  give  a  definition  of  Socialism 
which  would  be  accepted  by  all  Socialists  ;  but  in  all 
of  its  forms  Socialism  is  antagonistic  to  private  prop- 
erty. The  popular  form  at  present  is  State  Socialism, 
which  has  been  defined  as  "  The  ownership  by  the  State 
of  all  instruments  of  production  and  distribution." 
The  instruments  of  production  and  distribution  em- 
brace the  greater  part  of^what  is  now  private  property, 
and  under  State  Socialism  at  least  these  must  be 
owned  in  common.  Putting  the  control  of  them  in 
the  State  is  a  method  of  communism.  Instead  of  pro- 
viding for  some  new  way  of  managing  the  goods  held 
in  common,  State  Socialists  would  use  our  present 
election  machinery,  and  call  the  managers  by  the 

(151) 


152       OWNERSHIP    AND    CONTROL    OF   RESOURCES. 

familiar  names  of  our  present  government  officers- 
State  Socialism  is  the  holding  of  all  the  instruments 
of  production  and  distribution,  usually  including" 
dwellings,  in  common.  State  Socialists  do  not  demand 
a  division  of  goods,  but  that  the  State  shall  take 
possession  of  all  tne  farms,  and  the  factories,  and 
everything  by  which  civilized  man  gains  a  livelihood, 
and  work  them  on  the  common  account.  The  State  is- 
to  conduct  all  branches  of  business.  This  leaves  no- 
room  for  private  enterprise,  or  for  the  private  owner- 
ship of  anything,  except  personal  articles  of  the  nature- 
of  clothing,  books,  household  furniture,  etc.  Every 
man  must  be  employed  by  the  State,  and  work  for 
it  or  starve. 

Perhaps  the  most  popular  presentation  of  Socialism 
in  this  country  is  Bellamy's  "  Looking  Backward."  Iii 
it  he  assumes  that  the  division  of  the  product  of  the- 
nation's  labor  is  to  be  equal ;  that  it  is  to  be  "  share- 
and  share  alike."  Each  person  is  to  receive  precisely 
the  same,  without  regard  to  merit  or  labor  performed. 
This  is  the  practical  abolition  of  private  property.  It 
is  not  the  division  of  property  among  a  people,  but  its 
absorption  by  the  government,  so  that  no  man  owns- 
anything  and  the  State  owns  ^verything,  with  absolute 
equality  for  all.  No  Socialist  objects  to  a  practical 
ownership  of  some  articles  for  personal  use,  such  as- 
clothing  and  household  furniture  ;  though  some  would, 
in  theory,  regard  these  as  belonging  to  the  State,  and 
assigned  to  the  use  of  individuals,  as  a  railroad  company- 
may  assign  a  locomotive  to  an  engineer  in  its  employ. 
This  is  a  matter  of  no  consequence,  however,  for,  under 


PRIVATE   PROPERTY    OR    SOCIALISM? 

Socialism,  even  the  fullest  right  of  private  property 
in  such  articles  can  have  a  very  limited  application. 
All  the  means  of  production,  including  stores  and 
warehouses,  Socialism  insists  must  be  in  the  hands  of 
the  State.  All  business  of  every  kind,  all  production 
of  goods,  is  to  be  conducted  by  the  State. 

There  are  many  Socialists,  the  followers  of  Rodber- 
tus  for  instance,  who  do  not  advocate  equal  incomes  for 
all.  They  would  have  every  man  paid  in  labor  tickets,, 
using  common  labor  as  a  basis,  and  estimate  other 
forms  as  being  worth  so  many  times  as  much  as  com- 
mon labor,  hour  for  hour.  Such  a  system  would  prob- 
ably present  even  greater  difficulties  than  the  other; 
but  in  either  would  practically  destroy  private  property,, 
except  in  the  few  articles  mentioned.  The  varieties  of 
Socialism  are  numerous,  but  all  are  practically  an- 
tagonistic to  private  property ;  so  that  we  may  set  the 
principle  of  private  property  on  the  one  hand,  and  the 
various  forms  of  Socialism  on  the  other. 

Few  Socialists  at  the  present  day  hope  to  gain  their 
end  by  violence,  or  by  any  sudden  confiscation  of  goods. 
Many  talk  of  full  compensation  for  property  as  fast  a& 
absorbed  by  the  State ;  but  they  then  proceed  to  show 
how  useless  such  compensation  will  be,  except  for  the 
personal  gratification  of  the  former  owner  during  his- 
lif  etime.  As  the  State  absorbs  all  property,  the  owner 
can  not  invest  it,  and  can  only  receive  an  annuity  in 
the  shape  of  a  larger  share  of  goods  which  he  may  con- 
sume during  his  lifetime. 

THE  NATURAL  RIGHT  OF  PROPERTY. — Is  there  any 
natural  or  moral  right  of  property,  or  is  it  a  mere  ques- 


154       OWNERSHIP   AND    CONTROL    OF   RESOURCES. 

tion  of  expediency?  For  there  are  those  who  deny 
the  right  of  property,  who  nevertheless  hold  to  its  ex- 
pediency. Not  all  men  who  deny  a  natural  right  of 
property  are  Socialists.  Some  hold  that  it  is  better 
for  the  majority  of  the  people  that  property  should 
be  recognized.  Most  of  us  believe,  however,  that  in 
questions  like  this  it  is  best  to  see  if  there  is  any  nat- 
ural right  or  moral  principle,  which  is  firmer  ground 
than  our  opinions  of  expediency,  because  the  results 
of  social  experiments  are  very  uncertain. 

The  right  of  individual  property  is  found  in  the 
innate  conviction  that  a  man  is  entitled  to  the  result  of 
his  own  labor.  However  closely  we  are  related,  and 
mutually  dependent,  each  person  is  nevertheless  a  unit 
by  himself.  He  is  conscious  of  the  freedom  of  his  will 
to  do  as  he  pleases.  He  has  a  sense  of  responsibility 
to  others  and  to  higher  powers.  There  is  an  innate 
conviction  that  he  owns  what  he  has  made — that  the 
bow  he  has  shaped  from  the  sapling  is  his.  He  may 
exchange  it  for  flint  arrowheads,  with  one  who  has 
learned  to  chip  them  into  shape.  He  may  exchange 
his  labor  with  an  employer,  for  money  or  for  goods, 
but  he  feels  and  knows  that  his  labor  is  his  own.  The 
house  that  he  has  built  with  his  own  hands  is  his,  pro- 
vided what  he  has  gained  from  others  has  been  with 
their  consent.  This  ownership  of  himself  is  not  in- 
consistent with  his  duty  to  others ;  with  his  duty  to 
aid  his  tribe  or  his  nation  in  mutual  defense ;  with  the 
duty  of  a  parent  to  take  care  of  the  child  until  it  is 
able  to  take  care  of  itself ;  with  the  control  of  minor 
children,  or  with  other  duties  instinctively  recognized 


PRIVATE    PROPERTY    OR    SOCIALISM?  155 

in  Society.  These  duties  may  be  a  very  considerable 
tax  upon  him,  and  require  a  large  portion  of  his  labor 
or  its  results ;  but  they  do  not  change  the  fact  that  he 
owns  himself,  and  owns  the  article  he  makes  without 
the  aid  of  others. 

When  two  or  more  people  unite  in  production,  the 
product  belongs  to  them  as  a  body ;  and  the  question  of 
its  division  must  be  settled  by  agreement  made  before- 
hand, and  will  be  governed  by  natural  laws  to  be  con- 
sidered hereafter.  Where  a  thousand  men  unite  in  a 
factory,  the  distribution  of  the  product  of  their  com- 
bined labor  is  a  complicated  affair.  Where  one  man 
agrees  to  accept  a  specified  sum  from  an  employer,  in 
exchange  for  his  labor,  the  result  belongs  to  the  em- 
ployer ;  but  all  this  recognizes,  and  is  based  upon,  the 
fact  that  man  is  naturally  a  freeman ;  that  he  owns 
himself  ;  that  he  is  entitled  to  the  results  of  his  own 
labor,  and  has  the  right  to  dispose  of  its  product,  or  to 
dispose  of  the  labor  itself,  as  he  pleases.  He  must  not 
be  held  to  unreasonable  contracts  which  he  has  made 
without  understanding  them.  He  can  not  sell  his 
labor  for  a  length  of  time  that  involves  slavery.  Ev- 
ery bargain  must  be  based  on  the  fact  of  self-owner- 
ship. 

This  fact — that,  of  right,  a  man  owns  himself  and  is 
entitled  to  the  results  of  his  labor — is  the  natural 
Declaration  of  Independence  of  humanity, — independ- 
ence of  slavery,  and  independence  of  Socialism.  He  will 
call  no  man  owner,  and  he  will  not  sink  his  independ- 
ence and  himself  into  a  slave  of  the  majority,  which  he 
may  find  a  tyranny  worse  than  that  of  an  individual. 


156       OWNERSHIP   AND    CONTROL    OP   RESOURCES. 

The  right  of  private  property  goes  down  to  the 
foundation  of  things.  It  is  like  the  axioms  in  geome- 
try, or  the  fundamental  principles  of  morals.  Regard- 
less of  all  questions  of  expediency,  it  is  the  natural  be- 
lief of  man  that  there  is  a  "mine"  and  a  " thine  " 
that  there  is  such  a  thing  as  a  moral  right  to  property. 

It  would  be  easy  to  show  the  expediency  of  permit- 
ting property  to  be  held.  With  men  as  they  are,  So- 
cialism would  be  most  disastrous  to  the  welfare  of  the 
honest  and  industrious,  and  would  arrest  the  progress 
of  others.  Socialism  is  not  a  means  of  reforming  the 
wicked  or  elevating  the  indolent.  Not  only  would  it 
be  terribly  unjust  and  cruel  to  put  the  intelligent, 
hardworking  business  man  on  a  level  with  the  laziest 
and  most  degraded  negro  of  the  South,  but  it  would  be 
a  great  economic  loss.  The  negro  would  not  be  bene- 
fited, while  the  man  of  higher  civilization  and  charac- 
ter would  be  injured.  Generations  of  civilization  are 
required  to  make  a  man,  and  the  differences  between 
men  are  great  gulfs  which  can  not  be  bridged  by  So- 
cialism. If  Socialism  could  succeed  anywhere,  it  would 
be  in  an  organization  of  the  most  intelligent  and 
honest.  But  such  experiments  as  have  been  made 
give  no  more  encouragement  than  we  should  naturally 
expect.  The  question  of  expediency,  however,  while 
not  a  difficult  one  to  work  out,  would  require  more 
pages  for  its  elucidation  than  can  at  present  be  spared. 
It  would  be  necessary  to  compare  thousands  of  details 
of  the  two  opposed  plans  for  the  organization  of  so- 
ciety. John  Stuart  Mill  held  that  the  decision  rested 
upon  the  control  which  each  method  might  exert  over 


PRIVATE    PROPERTY    OR    SOCIALISM?  157 

ihe  increase  of  population.  The  danger  which  he 
feared  was  that  there  would  be  more  people  than  could 
be  provided  for  under  any  system,  and  he  held  that 
Socialism  would  exercise  less  restraint  on  the  increase 
of  the  lower  orders  of  people  than  Individualism. 

Any  advantage  which  Socialism  might  have  in  any 
-one  respect  would  be  more  than  overbalanced  by  the 
destruction  of  individual  independence,  by  the  denial 
of  the  right  of  one  to  the  result  of  his  own  labor,  and 
of  his  right  to  act  for  himself  in  business  undertak- 
ings. Socialism  strikes  at  the  highest  principles  of 
manhood,  and  would  tend  to  give  us  a  lower  grade  of 
men.  It  would  be  as  intolerable  to  men  of  a  certain 
stamp  of  character  as  would  slavery.  It  is  probably 
true  that  some  negroes  had  better  food,  rnedical  at- 
tendance and  care  when  slaves  than  after  they  be- 
came freemen.  It  was  better  for  them  to  work  on  a 
well-regulated  plantation  than  loaf  in  idleness.  Never- 
theless, freedom  is  better  than  slavery — better  even  for 
the  negro.  And  Socialism  is  the  slavery  of  the  indi- 
vidual, with  the  majority  for  his  master.  It  would  be 
a  system  so  intolerable  that  the  relative  economic  ad- 
vantages of  the  two  systems  are  hardly  worth  consid- 
ering. Whatever  economic  advantages  Socialism 
claims  must  be  secured  without  the  abolition  of  indi- 
vidualism, individual  rights,  and  the  rights  of  private 
property. 

WHAT  RESOURCES  MAY  BECOME  PRIVATE  PROP- 
ERTY.— The  right  of  private  property  does  not  mean 
that  everything  may  become  property.  Neither  does 
it  determine  what  goods  belong  to  particular  indi- 


158       OWNERSHIP   AND   CONTROL    OF   RESOURCES. 

viduals.  We  first  determine  that  there  is  such  a 
thing  as  property.  The  means  by  which  it  is  acquired, 
the  terms  on  which  it  is  held,  and  the  discussion  of 
what  resources  are  the  subjects  of  property,  are  subor- 
dinate, though  most  important  questions.  The  right 
of  property  does  not  include  the  right  to  steal  prop- 
erty,— by  which  we  mean  the  taking  possession  of 
what  belongs  to  another  individual.  It  does  not  im- 
ply the  right  of  one  man  to  appropriate  what  belongs 
to  all  men  in  general,  any  more  than  the  right  to  take 
from  one  in  particular.  It  is  always  in  order  to  in- 
quire how  one  got  his  money.  The  fundamental  fact 
is  that  there  is  such  a  thing  as  a  natural  right  of  prop- 
erty in  distinction  from  Socialism.  This  natural 
right  rests  solely  on  one's  ownership  of  himself  and 
the  thing  which  he  makes.  Each  man  owns  himself 
and  his  labor.  Thus  the  only  natural  right  of  prop- 
erty is  that  of  each  one  to  what  he  has  produced,  or 
has  obtained  by  honest  exchange.  Enormous  wealth 
may  result  from  the  proceeds  of  one's  own  labor. 
Joseph  Jefferson  has  obtained  the  power  (by  a  life- 
time of  painstaking  labor)  to  act  in  a  theater  in  such 
a  way  that  thousands  desire  to  see  him.  They  are 
willing  to  pay  a  dollar  or  two,  each,  for  the  entertain- 
ment he  can  furnish  in  a  single  evening.  Jefferson  has 
thus  received  a  great  fortune  in  exchange  for  his  own 
labor.  No  right  of  property  can  be  higher.  The  ability 
of  a  railway  superintendent  may  save  his  company  a 
hundred  thousand  dollars  a  year,  by  better  management 
than  that  of  any  other  man  whom  they  could  employ. 
This  great  power  of  labor  belongs  to  himself,  and  what- 


PRIVATE   PROPERTY    OR    SOCIALISM?  159 

ever  he  can  obtain  for  it  in  an  honest  bargain  is  his.  A 
well-informed  merchant  may  do  a  great  service  to  both 
buyer  and  seller  by  bringing  goods  from  distant  points, 
paying  more  for  them  than  the  producer  would  other- 
wise receive,  and  selling  them  cheaper  than  the  pur- 
chaser could  otherwise  buy.  The  profits  of  the  trans- 
action are  the  sole  result  of  his  labor,  and  as  he  has  a 
moral  right  to  his  labor,  so  he  has  a  moral  right  to  the 
profits.  We  have  seen  in  a  former  chapter  that  the 
power  of  labor  varies,  and  there  is  no  doubt  that  the 
services  of  some  men  to  society  are  worth  a  thousand 
times  as  much  as  those  of  others. 

The  moral  right  of  property  does  not  extend  beyond 
the  results  of  one's  own  labor.  If  property  is  con- 
ceded by  society  for  any  other  reason,  it  is  because  of 
expediency,  and  by  mutual  consent.  Eight  is  right, 
and  one  is  entitled  to  the  right,  even  though  in  the 
smallest  minority.  On  the  ground  of  expediency,  he 
may  claim  only  what  the  general  consent  of  his  nation 
allows. 


11 


CHAPTER  II. 

THE  OWNEBSHIP  AND  CONTROL  OF  LABOR. 

In  considering  the  ownership  and  control  of  the  four 
great  classes  of  Resources,  we  shall  not  follow  our  usual 
order,  but  begin  with  Labor.  Since  this  is  the  founda- 
tion of  all  right  of  property,  it  naturally  comes  first  in 
this  connection. 

It  is  a  self-evident  truth  that,  with  a  few  exceptions 
which  only  illustrate  the  principle,  the  power  of  labor 
belongs  to  the  man  in  whom  it  is  embodied.  The 
ownership  of  himself  carries  with  it  the  ownership  of 
all  his  powers.  He  must  be  free  to  exert  those  powers 
as  he  pleases,  so  long  as  he  does  not  interfere  with  the 
rights  of  others,  or  compel  them  to  provide  for  his 
wants.  Not  only  moral  right,  but  also  the  principle  of 
^expediency,  demands  freedom  and  recognition  of  the 
fact  that  one's  labor  power  is  his  own. 

1.  It  is  demanded  by  the  desire  for  liberty.  The 
whole  object  of  our  science  is  the  satisfaction  of  wants. 
One  of  the  desires  common  to  all  men,  though  stronger 
in  some  than  in  others,  is  liberty,  and  the  control  of 
one's  own  labor.  Whatever  other  wants  may  be  satis- 
fied with  the  subversion  of  this  principle,  this  one  re- 
mains unsatisfied.  The  most  perfect  organization  of 
communism  would  fail  to  satisfy  this  most  important 
want.  It  may  be  said  that  with  private  property  men 
are  obliged  to  put  themselves  under  the  control  of 

(160) 


OWNERSHIP   AND    CONTROL    OF    LABOR.  161 

others ;  but  one  may  change  employers,  or  turn  to 
other  forms  of  labor.  If  land  is  free,  as  in  new 
countries,  he  can  withdraw  entirely  from  the  wages 
system.  Thousands  of  the  best  men  of  the  Eastern 
States  have  gone  West  and  taken  up  farms  for  them- 
selves. Under  Socialism,  there  is  no  escape. 

2.  The  best  power  of  labor  is  not  called  out  except 
by  freedom.  If  one  consents  to  work  under  conir 
pulsion,  or  the  lash  of  the  slave-driver,  it  is  only  the 
lower  powers  that  are  engaged.  It  is  instructive  to 
compare  the  Southern  States,  as  they  existed  before 
the  war,  with  the  Northern.  Under  slavery  there  was 
little  invention,  little  use  of  labor-saving  machinery, 
and  everything  was  done  in  the  hardest  way.  Where 
one  is  assured  of  the  results  of  his  own  labor,  or  even 
a  considerable  part  of  it,  labor  power  is  increased 
many  fold.  The  power  of  invention  and  labor-saving 
is  called  into  exercise.  Intelligence  takes  the  place  of 
muscle,  and  the  wants  that  can  be  satisfied  are  vastly 
greater. 

APPARENT  EXCEPTIONS. — The  apparent  exceptions 
to  the  right  of %  each  person  to  the  control  of  himself 
and  his  labor  are : 

1.  Children. — This  is  simply  because  they  are  not 
yet  men,  but  men  in  the  process  of  growth.  The  in- 
fant is  utterly  helpless,  and  incapable  of  properly 
directing  his  efforts.  The  period  of  childhood  is  tem- 
porary, and  every  child,  if  he  lives,  will  come  to  the  age 
when  he  ought  to  be  free.  It  is  impossible  for  parents 
or  others  to  give  him  the  proper  care  and  education, 


162       OWNERSHIP   AND    CONTROL    OF   RESOURCES. 

except  with  considerable  power  of  control.  The  child 
is  a  debtor  to  his  parents  and  others  for  this  support 
during  earlier  years ;  and  this  also  forms  one  of  the 
grounds  of  his  obligations  to  Society,  whose  protection 
is  sometimes  more  important  than  that  of  the  parent. 
At  just  what  age  he  should  come  into  the  full  control 
of  his  own  labor  can  be  determined  only  in  each  case. 
The  control  of  the  child  before  he  is  able  to  take  care 
of  himself  forms  no  real  exception  to  the  rule  that  a 
man  should  control  his  own  labor. 

2.  Idiots  and  Insane. — The  control  of  these  is  jus- 
tified by  the  fact  that  they  are  not  in  their  right  mind, 
not  men  in  the  enjoyment  of  the  ordinary  powers  of 
manhood.     Such  control  is  sometimes  necessary  for  the 
protection   of  the  equal  rights  of    others  with    equal 
rights  with  themselves. 

3.  Paupers. — If  one  is  unable  to  provide  for  his- 
own  wants,  and  throws  the  burden  on  Society,  it  is  en- 
titled to  the  control  of  his  labor  as  compensation  there- 
for.    Even  if  it  made  a  profit,  it  would  be  entitled  to 
the  profit  in  return  for  its  supervision  ;  but  in  most 
cases  Society  hopes  at  the  best  only  that  the  labor  of 
such  persons  will  pay  the  expense  of  their  care.     It 
seldom  does  as  much  as  this. 

4.  Criminals. — Society  must   protect   itself   from 
these,  and  the  most  humane  form  of  protection  is  their 
imprisonment  at  hard  labor,  which  is  also  better  for 
them  than  idleness.     The  labor  seldom  pays  the  ex- 
penses of  maintenance.     If  it  did,  the  excess  would  be 
a  just  fine  as  punishment  for  crime.     A  criminal,  of 
course,  forfeits  some,  not  all,  of  the  rights  of  a  free- 
man. 


OWNERSHIP   AND   CONTROL    OF   LABOR.  163 

5.  Rights  of  Others. — One's  freedom  is  also  lim- 
ited by  the  freedom  of  others.     He  has  no  more  right 
to  infringe  on  their  privileges  than  they  on  his.     Liv- 
ing in  society  requires  limitations  which  must  be  the 
same  for  all,  that  all  may  have  equal  rights.     One's 
control  of   his  own  labor  is  thus  limited.     He  may 
justly  be  forbidden  to  engage  in  a  business  which  is 
offensive  to  his  neighbors,  but  there  must  be  the  same 
rule  for  all.     If  one  man  is  forbidden  to  erect  an  of- 
fensive factory  within  a  certain  district,  no  one  else 
must  be  allowed  to  create  the  same  nuisance.     That  is, 
Society  may  prescribe  the  terms  on  which  manufactur- 
ing must  be  carried  on,  and  require  all  to  conform  to 
them.     Every  man  is  thus  on  an  equality.     There  is  a 
limitation  of  one's  control  of  his  labor,  but  it  is  a  lim- 
itation imposed  on  all. 

6.  Taxes. — Society  is  justly  entitled  to  a  part  of 
the  proceeds  of  one's  labor  in  return  for  the  protection 
it  gives  and  the  benefits  it  bestows.      These  benefits 
make  all  the  difference  between  civilization  and  bar- 
barism, so  that  no  man  is  ever  asked  in  highly  civilized 
•countries  to  pay  the  full  value  for  what  he  receives. 
The  proper  view  is  that  government  is  carried  on  as 
a   co-operative    organization,   or    a  great  partnership. 
Those  who  manage  its  details  are  bound  to  conduct  the 
business  of  the  government  as  cheaply  as  possible,  and 
the  cost  must  be  paid  by  the  members  under  some  one 
of  many  systems  of  taxation.     To  take  any  more  than 
is  necessary,  is  robbery  of  the  people.     One  can  not 
Avithdraw  from  Society,  because  there  may  be  no  place 
to  go ;  but  he  may  not  make  the  excuse  that  he  does 


164      OWNERSHIP   AND    CONTROL    OF   RESOURCES. 

not  desire  any  government,  to  avoid  paying  his  share 
of  its  cost.  It  would  be  impossible  to  take  its  benefits 
away  from  him,  unless  he  were  declared  an  outlaw,  and 
public  proclamation  were  to  be  made  that  no  one  would 
be  punished  for  seizing  his  property,  or  for  personal 
assault  on  himself  and  family.  The  supposed  case 
shows  what  Society  does  for  one  under  a  high  civiliza- 
tion. At  the  same  time,  the  measure  of  the  benefit 
received  is  not  the  measure  of  the  payment  to  be  made, 
because  he  is  a  part  of  Society,  and  no  one  has  a  better 
right  than  himself  to  the  advantages  of  the  Society  of 
which  he  forms  a  part.  The  measure  of  his  obligation 
is  only  the  cost  of  the  most  economical  maintenance  of 
the  government. 

These  are  only  seeming  exceptions  to  the  truth  that 
one  owns  his  own  labor  as  a  matter  of  right,  or  they 
are  rather  the  limitations  which  properly  define  and. 
strengthen  it. 


CHAPTEE  III. 

THE  OWNERSHIP  AND  CONTROL  OF  THE  RESOURCES 
OF  NATURE. 

Since  no  man  has  created  these,  there  can  be  no  nat- 
ural right  of  property  in  them.  Any  qualified  right 
must  be  granted  by  Society  solely  on  the  ground  of 
expediency.  There  is  no  clear  thinker  who  takes  any 
other  view.  Many  argue  that  private  ownership  is  the 
best  system  for  all  concerned ;  but  no  one  can  find  any 
natural  right  of  property  in  the  Kesources  of  Nature, 
which  no  man  has  made.  Two  self-evident  statements 
are  necessary  to  clear  the  ground : 

1.  We  must  put  aside  any  personal  interest.  One 
who  is  thinking  how  any  possible  conclusion  may  affect 
himself  is  in  no  condition  to  reach  the  truth.  Scien- 
tific investigation  is  intellectual  and  cold.  It  seeks  the 
truth,  though  the  truth  should  be  distasteful.  One 
difficulty  with  all  studies  in  Economics  is  that  the  re- 
sults touch  the  personal  interests  and  prejudice  of  every 
man.  If  conclusions  run  contrary  to  a  dogma  of  one's 
political  party,  he  will  have  none  of  them.  If  there 
is  danger  that  in  practice  they  would  lead  to  personal 
loss,  he  indignantly  affirms  that  they  can  not  possibly 
be  true.  Hence  we  can  hope  for  correct  results  only 
from  one  who  has  the  scientific  spirit,  which  puts  truth 
above  everything  else,  and  searches  for  facts  regardless 
of  consequences. 

(165) 


166       OWNERSHIP   AND    CONTROL    OF   RESOURCES. 

2.  Our  investigation  will  not  lead  us  to  any  form 
of  confiscation.     All  present  rights  must  be  respected. 
We  may  properly  take  from  one  the  goods  he  has  ac- 
quired by  fraud,  and  restore  them  to  their  rightful 
owner ;  but  where  Society  has  guaranteed  property  in 
any  form,  it  must  not  confiscate  what  it  has  recognized. 
If  any  loss  is  to  be  borne,  it  must  be  by  Society  as  a 
whole,  and  shared  among  all,  on  some  such  principle 
as  governs  the  raising  of  taxes. 

3.  We  must  separate  the  Resources  of  Nature  from 
those  produced  by  human  industry ;  land  from  the  im- 
provements.    With  the  atmosphere  as  a  resource  of 
nature,  complicated    questions    seldom    arise.     Very 
seldom  is  human  labor  combined  with  it.     The  same  is 
true  in   a  less   degree  of   water.     But  land  is  seldom 
used  without  improvements.     The  fences,  the  drains, 
the  buildings  of  a  farm,  are  all  products  of  human  in- 
dustry.    The  commercial  value  of  a  farm  must  always 
be   separated  into  two   parts:    First,  what   the    land 
would  be  worth  if  a  natural  prairie  with  neither  fence 
nor  drain  nor  timber  on  it ;   second,  what  the  improve- 
ments are  worth,  and  the  commercial  value  of  the  im- 
provements may  be   greater   than   that  of   the  land. 
The  separation  is  more  easily  made  in  a  city.     We  un- 
derstand that  a  building-lot  is  worth  so  much,  and  the 
building  so  much.     Frequently  the  two  have  different 
owners.     The  proprietor  of  the  building  pays  ground 
rent  to  the  owner  of  the  land.     Many  buildings  are 
erected  in  cities  on  leased  ground,  and  the  ground  rent 
is  sometimes  a  variable  sum.     As  no  one  knows  what 
land  will  be  worth  in  the  future,  it  is  agreed  that  the 


OWNERSHIP    OF   THE   NATURAL    RESOURCES.       167 

builder  shall  pay  a  fixed  ground  rent  for  a  period  of 
iive  or  ten  years,  and  that  there  shall  be  a  revaluation 
of  the  land  by  arbitrators  every  five  or  ten  years  there- 
after. The  owner  of  the  building  thus  agrees  to  pay 
whatever  the  annual  use  of  the  land  may  be  worth. 
Unless  this  distinction  between  land  and  improvements 
is  clearly  seen,  and  firmly  fixed  in  the  mind,  all  further 
discussion  will  be  useless.  Land  is  a  resource  of 
nature;  improvements  are  the  products  of  human 
labor.  The  distinction  is  as  fundamental  and  as  im- 
portant as  any  that  can  be  made  in  the  science  of  Eco- 
nomics. It  is  the  distinction  between  the  gift  of 
nature  and  the  work  of  man. 

It  is  precisely  because  the  Resources  of  Nature  are 
the  gifts  of  nature,  or  the  gifts  of  God,  that  there  can 
be  no  natural  right  of  individual  property  in  them. 
For  one  man's  right  to  nature's  resources  can  be  no 
higher  than  that  of  another.  They  are  given  by  the 
Creator  to  all  men.  The  discussion  of  the  control  of 
Natural  Resources  centers  in  land,  although  the  same 
principles  are  applicable  throughout  the  list.  Social- 
ism would  settle  the  difficulty  by  working  land  by  the 
State  on  the  common  account.  Individualism  sees  the 
necessity  of  some  means  whereby  possession  can  be 
given  to  individuals,  who  will  improve  and  work  land 
on  their  own  account.  It  also  recognizes  the  natural 
desire  of  most  men  for  a  home  of  their  own — a  piece 
of  ground  from  which  they  can  exclude  others,  and 
which  they  can  improve  after  their  own  fashion.  A 
natural  suggestion  is  therefore  made  that,  since  land  is 
the  gift  of  nature  to  the  human  race,  a  nation  like  the 


168      OWNERSHIP   AND   CONTROL    OF   RESOURCES. 

United  States  divide  it  equally  among  its  people,  giv- 
ing to  each  his  due  share ;  or  sell  the  public  domain  on 
the  common  account.  The  injustice  of  this  plan  arises 
from  ignoring  the  rights  of  the  next  generation.  The 
earth  was  created  for  the  human  race,  to  be  used  by 
each  generation  in  turn.  Men  of  Washington's  day 
had  no  better  right  to  land  than  we,  and  if  this  gen- 
eration seize  on  the  territory  of  the  nation  and  divide  it 
among  themselves,  what  is  the  next  generation  to  do  ? 
What  will  the  man  who  is  born  to-morrow  do?  If  it 
be  said  that  the  land  naturally  descends  from  parents  to 
children,  the  reply  is,  that  if  we  profess  to  give  one  a- 
title  to  his  share  of  the  land  forever,  he  may  exchange 
it  for  whisky,  and  have  no  land  to  leave  his  children, 
whereas  their  natural  right  to  a  share  in  the  earth's^ 
surface  is  as  good  as  was  their  father's.  A  nation, 
might  properly  divide  its  land  among  those  now  living, 
if  it  gave  each  one  only  a  life  interest  therein.  The 
earth  was  made  for  man  to  be  used,  but  no  one's  nat- 
ural title  can  extend  beyond  his  lifetime ;  otherwise  he 
would  trench  on  the  rights  of  the  next  generation. 

THE  LAND  LAWS  OF  MOSES. — The  land  laws  laid 
down  by  Moses  are  admirable  in  their  practical  applica- 
tion of  these  principles.  It  was  fully  recognized  that  the 
land  belonged  to  Jehovah,  and  that  Palestine  had  been 
set  apart  for  the  use  of  the  Israelites.  It  was  divided 
among  them — first  among  the  tribes,  and  then  among 
the  families  of  each  tribe.  The  fact  that  individuals 
had  only  a  temporary  interest  was  recognized  by  mak- 
ing the  land  inalienable  in  each  family.  It  could  not 
be  sold  for  a  longer  term  than  fifty  years,  and  seldom 


OWNERSHIP    OF    THE    NATURAL    RESOURCES.       169 

for  so  long  a  period.  At  the  year  of  Jubilee  the  land 
of  each  family  was  to  revert  to  the  seller  or  his  de- 
scendants, and  as  the  Jubilee  occurred  once  in  fifty 
years,  the  average  period  for  which  land  could  be  sold 
was  only  a  quarter  of  a  century,  or  less  than  the  ordi- 
nary life  of  one  generation.  If  sold  immediately  after 
a  year  of  Jubilee,  it  was  still  for  a  period  of  less  than 
an  ordinary  lifetime.  By  this  provision,  one  could  dis- 
pose, roughly  speaking,  of  not  much  more  than  his  own 
life  interest.  Had  Moses'  law  been  carried  out,  there 
would  have  been  no  landless  families  in  Israel.  The 
plan  was  adapted  only  to  an  agricultural  people,  and 
would  not  be  the  best  to-day.  Its  interest  consists  in 
the  fact  that  Moses,  under  Jehovah's  direction,  recog- 
nized the  principles  here  laid  down — that  the  use  of 
land  belongs  to  all  the  people  alike,  and  that  there  can 
be  no  absolute  ownership  by  any  one. 

The  right  of  each  generation  to  the  use  of  the  earth 
extends  only  through  the  lifetime  of  its  members. 
The  man  born  a  thousand  years  hence  will  have  the 
same  right  to  a  share  of  the  earth's  surface  as  those 
now  living.  No  laws  we  can  make  can  affect  the  right 
of  a  future  generation,  or  any  member  thereof.  A  man 
can  not  rightfully  sell  the  life  interest  of  his  grand- 
children. 

VALUE  OF  LAND. — Value  is  given  to  a  particular 
piece  of  land,  not  by  the  improvements  its  owner  has 
made,  but  by  those  which  others  have  made  on  other 
land  around  it.  A  city  lot  lies  vacant  for  years,  pos- 
sibly in  the  possession  of  minor  heirs.  Its  original 
owner  bought  it  for  a  trifle,  and  has  paid  nothing  but 


170      OWNERSHIP   AND   CONTROL    OF  RESOURCES. 

the  taxes.  Five  and  ten  story  buildings  have  been 
•erected  about  it,  and  it  is  now  worth  a  million  dollars 
an  acre.  This  enormous  fortune  is  not  the  result  of 
his  labor,  or  of  any  service  he  has  rendered  in  So- 
ciety. It  is  the  result  of  other  men's  effort  and  enter- 
prise. The  increased  value  belongs,  of  right,  to  those 
who  have  made  the  city  and  given  his  lot  all  the  value 
it  possesses. 

The  value  of  the  land  in  the  city  depends  on  the 
country  around  it — the  trade  which  it  can  draw,  the 
markets  it  can  find  for  its  manufactures.  In  short,  the 
value  of  all  land  depends  on  the  people  who  live  on 
and  around  it,  or  have  relations  with  it.  Not  on  their 
number  alone,  but  on  their  habits,  tastes,  the  number 
of  wants  they  have  to  satisfy,  their  ability  to  labor, 
and  their  moral  character.  What  would  an  acre  of 
land  be  worth  in  Chicago,  were  there  no  people  west  of 
Lake  Michigan  ?  Since  the  value  of  land  is  due  en- 
tirely to  the  people,  it  follows  that  the  value  belongs  to 
them  as  the  result  of  their  efforts  and  character. 

The  perpetual  ownership  of  farming  land  in  a  coun- 
try like  the  United  States  is  not  a  matter  of  great  im- 
portance, because  of  its  abundance.  We  could  not 
allow  one  man  to  monopolize  a  large  portion  for  a  pri- 
vate park,  but  the  absolute  ownership  of  an  ordinary 
farm,  under  the  condition  that  it  is  kept  in  cultivation, 
would  not  give  the  owner  so  much  advantage  over 
others.  The  real  land  question  is  the  land  of  cities 
and  favored  localities.  It  is  absolutely  necessary  that 
there  be  centers  of  population,  and  that  the  combined 
efforts  of  all  people  shall  go  to  increasing  the  value  of 


OWNERSHIP    OF   THE   NATURAL    RESOURCES.       171 

a  little  land  in  those  centers.  The  simplest  instance- 
is  a  western  county.  Let  us  suppose  the  land  ta 
be  equally  fertile  and  useful,  equally  desirable  so  far 
as  the  work  of  nature  is  concerned.  County  lines 
must  run  somewhere,  and  the  county  must  have  a- 
county  seat — one  place  where  the  public  offices  are 
located  and  the  courts  are  held.  Suppose  its  location 
is  determined  by  the  convenience  of  the  entire  popu- 
lation, and  is  in  the  geographic  center.  The  fact  that 
the  county  business  must  be  done  here  makes  it  a 
better  location  for  all  lines  of  business ;  and  the  county 
seat  is  certain  to  be  something  of  a  place.  If  its  lots 
are  worth  twenty  dollars  a  front  foot  when  farms  are 
worth  twenty  dollars  an  acre,  the  added  value  is  given 
by  the  population  of  the  entire  county — by  those  ten 
miles  distant  as  well  as  by  the  residents  of  the  village. 
If  added  value  comes  from  natural  advantages,  such 
as  a  water  power  or  a  natural  location  for  a  railroad, 
these  natural  advantages  belong  to  all  the  people — ta 
one  man  as  well  as  to  another.  Everything,  therefore, 
that  goes  to  make  land  worth  more  in  this  county  seat 
is  the  property  of  the  people. 

So  far  as  the  value  is  created  by  the  presence  of  a- 
civilized  and  intelligent  population,  it  is  justly  shared 
among  all.  So  far  as  it  depends  on  natural  advan- 
tages, it  belongs  to  one  man  as  well  as  another.  From 
either  point  of  view,  it  is  plain  that  all  the  land  and 
its  value  belong  to  Society — equally  to  all  men  in  the 
nation — and  that  this  property  right  holds  through  all 
changes  of  value,  since  all  increase  is  due  to  Society. 
It  can  not  be  said  too  often  that  land  must  be  dis- 


172       OWNERSHIP   AND    CONTROL    OF   RESOURCES. 

tinguished  from  its  improvements ;  and  that  the  latter 
are  the  property  of  the  maker,  by  the  highest  of  rights. 
When  one  builds  a  house,  it  is  his  because  he  made  it. 
The  fence  is  his,  by  the  right  of  his  labor.  The  im- 
provements can  not  always  be  removed  from  the  land ; 
but  this  is  not  the  only  instance  where  people  have  an 
undivided  interest,  and  where  two  people  or  corpora- 
tions own  shares  in  the  same  thing.  The  chief  value 
of  land  is  in  favored  spots  or  localities.  The  least 
desirable  land  is  usually  worth  nothing. 

On  the  assumption  that  all  the  value  of  land  is  cre- 
ated by  Society,  it  belongs  equally  to  all  members.  It 
is  not  a  question  of  how  much  of  the  land  of  a  nation 
has  value.  More  than  half  may  still  be  unoccupied. 
Whatever  value  is  found  in  the  more  favored  portions 
has  been  given  by  Society. 

PRACTICAL  METHODS. —  There  being  no  natural 
right  of  individual  property  in  land,  or  in  any  of  na- 
ture's resources,  those  who  defend  such  property  do  so 
on  the  ground  of  expediency.  The  importance  of  in- 
dividual possession  is  well  understood.  The  necessity 
for  some  security  in  possession  is  equally  apparent. 
Improvements  can  seldom  be  removed,  since  from  their 
nature  they  are  attached  to  the  land.  It  is  the  supposed 
impossibility  of  making  the  best  use  of  land,  of  sat- 
isfying the  want  of  families  for  homes,  and  of  secur- 
ing one  in  making  permanent  improvements  that  has 
led  so  many  to  reject  the  truth  of  the  natural  own- 
ership by  the  people.  Without  permitting  himself  to 
answer  the  question,  Can  there  be  any  right  of  private 
ownership  in  the  Resources  of  Nature?  one  naturally 


OWNERSHIP    OF    THE    NATURAL    RESOURCES.       173 

jumps  to  the  other  question,  How  will  it  work  ?  If 
we  can  see  any  way  by  which  all  the  advantages  of 
private  ownership  of  land  can  be  had,  it  will  disarm 
prejudice,  and  make  us  more  willing  to  admit  the 
truths  of  the  preceding  pages,  from  which  there  is 
no  logical  escape. 

IN  A  NEW  COUNTRY. — If  no  private  titles  to  land 
liad  been  given,  and  we  were  at  the  beginning  of  a  new 
nation,  when  all  the  land  is  "  government  land,"  the 
proper  method  would  be  simple.  The  natural  way  of 
managing  the  land  of  the  people  is  to  rent  it  under  a 
perpetual  lease,  with  a  revaluation  of  the  rent  every 
few  years.  It  is  the  system  under  which  some  of  the 
best  buildings  of  Chicago  have  been  erected,  except 
that  the  rent  is  there  paid  to  private  owners,  instead 
of  to  the  people. 

Land  can  be  cultivated  by  the  government  only  un- 
der some  form  of  State  Socialism.  It  can  not  be  ab- 
solutely sold,  since  the  rights  of  future  generations  are 
the  same  as  those  of  the  present.  To  lease  for  a  short 
period,  or  to  sell  a  life  interest,  prevents  proper  im- 
provements ;  no  one  will  erect  a  brick  block  on  land 
which  he  expects  to  forfeit,  and  the  expectation  of  per- 
manent possession  is  needed  to  satisfy  the  wishes  of 
most  holders.  There  is,  however,  not  the  slightest 
difficulty  in  leasing  land  with  a  permanent  tenure,  the 
rent  to  be  precisely  what  the  use  of  the  land  is  worth, 
and  to  vary  as  its  value  varies.  While  we  can  not  bind 
future  generations,  they  would  recognize  the  right  of 
the  holder  to  improvements ;  and  would  certainly  per- 
mit him  to  continue  to  hold  the  same  piece  of  land  on 
payment  of  what  they  estimate  the  annual  value  to  be. 


174      OWNERSHIP   AND   CONTROL   OF  RESOURCES. 

If  we  were  at  the, beginning,  in  a  new  country,  all 
would  be  easy;  and  it  is  easy  enough,  now,  in  the- 
United  States,,  with  the  government  land  still  unsold  in 
the  West.  Let  us  start  right.  This  land  belongs  to- 
all  the  people — to  those  now  living,  for  their  lives,  and 
to  the  people  who  come  after  them.  Its  use  is  not 
worth  much,  if  anything,  at  first.  We  do  not  know 
what  its  use  will  be  worth  in  the  future.  We  want 
some  honest,  practical  plan  by  which  men  can  go  to 
work  on  a  quarter  section  and  improve  it,  with  a 
reasonable  assurance  of  permanent  possession  on  terms 
which  will  insure  them  the  results  of  their  own  labor. 
So  we  say  to  every  man  who  desires,  "  Take  a  piece  of 
land  and  improve  it ;  build  on  it.  It  is  worth  nothing 
now,  and  you  need  pay  nothing  for  its  use  the  first 
year.  After  a  year  or  two,  you  shall  pay  precisely 
what  the  use  of  the  land,  aside  from  your  improve- 
ments, is  worth.  Markets  will  come  with  society.  The 
land  you  live  on  will  gain  value  from  the  people  who 
settle  around  you  and  beyond  you,  and  from  the  prog- 
ress of  every  part  of  the  great  nation.  We  do  not 
know,  nobody  knows,  what  the  use  of  this  land  will  be 
worth  in  twenty  years.  It  may  be  in  the  heart  of  a 
city.  What  it  is  worth  each  year  will  be  determined 
by  an  assessor.  Every  year,  or  few  years,  there  shall 
be  a  revaluation  ;  and  what  that  piece  of  land,  apart 
from  the  improvements,  is  worth,  you  shall  pay, 
whether  it  is  ten  cents  an  acre  in  the  country,  or  a 
hundred  dollars  a  front  foot  in  a  city.  You  pay  noth- 
ing for  ownership;  the  actual  title  is  in  the  govern- 
ment ;  but  the  possession  is  yours  so  long  as  you  pay 


^OWNERSHIP    OF   THE   NATURAL    RESOURCES.       175 

what  the  rent  of  such  land  is  worth ;  and  you  pay 
only  for  its  annual  use."  The  estimate  of  this  value 
of  the  annual  use  would  not  be  more  difficult  than  as- 
sessing taxes  at  present.  The  standard  is  unimproved 
land.  A  lot  with  a  ten-story  building  would  pay  no 
more  rent  than  the  lot  beside  it  with  a  one-story  build- 
ing. The  farm  with  a  five-thousand-dollar  house  and 
the  best  improvements,  in  the  highest  state  of  cultiva- 
tion, would  pay  no  more  rent  than  the  farm  with  no 
buildings.  Each  pays  what  the  use  of  the  land  is 
worth,  and  no  one  pays  taxes  on  buildings  or  improve- 
ments. Improvements  are  to  be  encouraged,  and  the 
best  farmer  gets  the  benefit  of  all  he  makes. 

It  is  not  likely  that  an  assessor,  or  board  of  as- 
sessors, would  estimate  the  average  rent  of  land  at 
more  than  half  its  real  annual  value.  There  would  be 
no  danger  that  any  man  would  be  required  to  pay 
more  than  the  true  economic  rent.  The  fact  that  he 
paid  less,  would  give  land  a  selling  price ;  but  that  sell- 
ing price  would  represent  only  that  part  of  the  annual 
rent  which  Society  is  unable  to  collect,  through  under- 
valuation in  giving  the  holder  the  benefit  of  the  doubt. 
The  right  of  Society  to  take  full  rent  would  be  un- 
doubted. If,  for  any  reason,  the  government  desired 
to  take  a  piece  of  ground  for  public  use,  as  a  park  or 
street,  it  would  pay  the  holder  the  value  of  the  im- 
provements thereon,  but  nothing  for  the  land.  That 
always  belonged  to  Society,  and  has  only  been  rented. 

The  next  generation  would  not  be  embarrassed  by 
such  a  contract.  Its  ownership  of  the  land  is  fully 
recognized.  It  will  see,  as  we  do,  the  natural  right  of 
12 


176       OWNERSHIP   AND    CONTROL    OF   RESOURCES. 

the  holder  to  the  improvements.  The  government  will 
not  want  the  land.  If  it  takes  it,  it  will  have  the  im- 
provements to  pay  for.  If  the  holder  pays  the  annual 
rent,  he  will  be  left  in  possession.  This  rent  the  fu- 
ture will  fix ;  that  is,  each  year's  rent  of  the  land  will  be 
determined — increased  when  a  particular  piece  becomes 
more  valuable,  diminished  when  it  is  worth  less  to  use. 
It  is  strict  justice,  not  benevolence.  Society  takes 
what  belongs  to  it.  The  holder  pays  each  year  what 
the  use  of  the  land  is  worth.  If  he  fails  to  pay,  his 
improvements — not  the  land — are  sold,  and  the  money 
paid  to  him ;  possession  of  the  land  is  given  to  the  one 
who  buys  the  improvements,  for  so  long  as  he  pays  the 
rent. 

The  collection  of  ground  rent  would  do  away  with 
the  necessity  of  taxes.  There  would  be  some  farms 
where  the  rent  would  be  even  less  than  the  taxes  the 
farmer  now  pays  on  his  land  and  its  costly  improve- 
ments. There  would  be  many  property-holders  in  vil- 
lages who  would  pay  less  in  rent  for  the  ground  their 
houses  stand  on,  than  they  now  pay  in  taxes  on  the 
land  and  buildings  combined.  There  would  be  no 
taxes  on  personal  property.  There  need  be  no  indirect 
taxes.  The  largest  increase  of  rents  would  be  in 
cities,  where  land  is  so  valuable. 

There  is  no  doubt  that  this  system  should  be  imme- 
diately adopted  with  all  government  land  yet  unsold. 
There  would  be  no  question  of  present  ownership, 
since  the  government  is  still  the  owner.  It  would  at 
once  stop  the  taking  of  government  land  for  specula- 
tion. No  one  would  go  on  such  land  unless  he  in- 


OWNERSHIP   OF  THE   NATURAL   RESOURCES.       177 

tended  to  make  use  of  it.  It  would  be  of  no  ad- 
vantage to  any  corporation  to  get  possession  of  large 
tracts  to  sell  at  a  higher  price.  Land  would  not  be 
pre-empted  until  it  was  needed.  Settlements  would  ex- 
tend by  bringing  into  cultivation  land  adjoining  that 
already  occupied.  Settlers  would  not  need  to  go  far 
into  the  wilderness  to  get  beyond  the  land  already  tak- 
<en,  but  not  occupied.  If  a  new  Indian  reservation 
were  opened,  we  should  see  no  such  scramble  as  now ; 
because  every  settler  would  understand  that  he  would 
have  the  rent  to  pay  on  all  the  land  he  got,  and  that 
the  rent  on  the  choice  pieces,  and  the  town  sites,  would 
be  as  much  as  they  were  worth.  The  ownership  re- 
mains in  the  people.  We  violate  no  principle  of  right 
or  justice;  and  no  one  knows  what  the  public  heri- 
tage may  be  worth  in  the  future. 

The  plan  of  leasing  land  at  a  variable  rent,  to  be 
fixed  from  time  to  time,  is  not  only  the  natural  method 
for  the  use  of  all  government  land,  but  it  is  the  only 
•escape  from  State  Socialism,  on  the  one  hand,  and  gross 
injustice,  on  the  other.  The  ground  for  its  advocacy 
is  right  and  justice,  not  expediency.  It  would  confer 
•on  a  nation  the  greatest  blessing  of  any  economic  re- 
form, but  this  is  secondary  to  the  fact  that  it  is  the 
only  just  method  of  permanent  possession  of  land  by 
an  individual. 

IN  OLDER  COUNTRIES. — In  older  countries  land  is 
not  in  the  hands  of  the  original  takers.  It  has  been 
sold  again  and  again,  and  the  government  has  guaran- 
teed the  title,  and  is  as  much  bound  to  protect  the 
liolder  as  to  pay  the  national  debt.  We  are  in  a  posi- 


178       OWNERSHIP    AND    CONTROL    OF   RESOURCES. 

tion  where  justice  to  all  parties  is  impossible.  The- 
government,  which  attempted  to  give  a  perpetual  title 
to  land,  sold  what  it  did  not  own ;  but  the  purchasers- 
were  innocent,  and  must  bear  no  greater  loss  than  those 
who  have  invested  their  money  in  other  ways.  It 
would  be  as  unjust  to  take  the  thousand  dollars  which 
one  man  has  paid  for  a  vacant  city  lot  under  the  en- 
couragement of  the  laws,  as  to  take  the  thousand  dol- 
lars another  man  had  invested  in  machinery.  Here  is* 
the  mistake  of  Henry  George.  He  assumes  that  be- 
cause the  government  had  no  right  to  sell  land  in  the 
first  place,  the  people  may  take  it  from  the  present 
owners.  He  argues  that  if  an  innocent  purchaser  has 
bought  stolen  property,  the  law  requires  him  to  give  it 
up  to  the  original  owner ;  the  owner  can  take  his  prop- 
erty wherever  he  finds  it.  So,  he  argues,  the  people, 
as  the  original  and  rightful  owners,  may  retake  their 
land ;  and  the  private  holder  is  in  the  position  of  a 
man  who  has  paid  money  for  personal  property  to 
which  the  seller  had  no  title.  The  two  suppositions 
are  not  parallel.  He  who  buys  a  horse,  buys  it  know- 
ing that  he  takes  the  risk  of  its  having  been  stolen. 
The  lajid  is  taken  under  the  forms  of  law,  transferred 
from  purchaser  to  purchaser  in  accordance  with  law, 
and  its  title  guaranteed  by  the  government. 

John  Stuart  Mill,  who  clearly  saw  the  relation  of 
landholders  to  Society,  writing  for  England  where  al- 
most all  land  is  rented,  proposed  that  the  present  rent 
of  all  lands  be  recorded;  and  that  the  government 
take  any  natural  increase  in  the  future.  He  recognized 
the  right  of  the  holder  to  the  present  land  values,  but 


OWNERSHIP    OF   THE   NATURAL    RESOURCES.       179 

demanded  that  the  private  absorption  of  increase  of 
land  values  be  stopped  at  once. 

The  principle  of  private  ownership  has  received  a 
severe  shock  by  the  action  of  the  British  Government 
in  Ireland.  Land  was  there  held  on  the  same  terms 
.as  in  the  United  States.  An  Irish  landlord  had  no 
power  which  is  not  possessed  by  every  American  farm- 
er. The  latter  is  permitted  to  manage  his  land  him- 
self, or  rent  it  for  all  he  can  get.  If  the  tenant  fails 
to  pay,  he  can  put  him  off.  Yet  the  English  Govern- 
ment has  changed  this  tenure,  unquestioned  in  law  for 
a  century,  into  a  mere  right  to  such  rent  as  may  be 
fixed  by  the  court.  The  owner  is  actually  prohibited 
from  taking  possession  of  land  which  was  his  by  the 
law  of  one  of  the  strongest  governments  in  the  world. 
It  is  a  more  violent  change  than  would  be  the  taking 
of  all  landed  property  by  our  government.  The  cause 
was  the  pressure  of  the  people  of  Ireland. 

The  right  of  Society  to  take  possession  of  any  and  all 
land  on  payment  of  its  present  value  is  unquestioned  ; 
and  this  right  is  freely  exercised  by  condemnation  for 
public  uses,  or  for  such  semi-public  purposes  as  rail- 
ways. 

The  only  practical  step  which  presents  no  difficulties 
is  to  stop  the  sale  of  public  lands.  Not  another  acre 
should  go  into  private  ownership.  No  matter  how  poor 
or  worthless  at  present,  it  belongs  to  the  people ;  and 
there  is  no  excuse  for  deeding  away  the  people's  heri- 
tage. The  Adirondack  Mountains  were  once  thought 
to  be  worthless,  and  they  went  into  private  ownership. 
Now  the  people  want  a  great  park  in  this  wilderness, 


180       OWNERSHIP   AND    CONTROL    OF   RESOURCES. 

and  they  will  pay  roundly  for  it.  The  reservation  of 
such  great  parks  as  the  Yellowstone  is  a  step  in  the 
right  direction  ;  and,  although  privileges  are  given  to- 
private  parties,  the  fact  that  the  government  owner- 
ship of  the  land  is  recognized  will  be  a  basis  for  their 
correction  in  the  future.  All  public  land  should,  here- 
after, be  leased  on  the  condition  that  the  occupant 
pays  whatever  it  is  worth  each  year,  forever ;  and  that 
if  the  people  need  to  retake  possession  of  their  own, 
they  pay  only  the  value  of  the  improvements.  Prompt 
legislation  of  this  kind  would  save  to  the  people  mil- 
lions of  acres  of  land  yet  unappropriated,  much  of 
which  lies  among  mountains  and  about  the  headwaters 
of  rivers,  and  should  never  be  cultivated.  It  should 
be  reserved  and  protected  for  the  benefit  of  more 
fertile  land  below. 

For  this  generation,  at  least,  the  great  body  of  land 
will  be  held  as  private  property.  What  the  next  gen- 
eration will  do,  it  is  impossible  to  foretell.  We  have 
no  right  to  bind  them  if  we  could,  and  no  power  to- 
bind  them  if  we  would. 


CHAPTER  IV. 

OWNERSHIP    OF    THE    RESOURCES    PRODUCED    BY 
HUMAN  INDUSTRY. 

It  is  self-evident  that  Produced  Wealth,  being  the 
result  of  labor,  is  a  proper  subject  of  property.  The 
idea  of  property  adheres  to  it.  The  question  is  rather, 
To  what  person  does  a  specified  article  belong?  It 
will  be  easier  to  begin  with  the  simplest  cases,  and  pro- 
ceed to  the  more  difficult. 

1.  We  have  seen  that  there  is  an  innate  belief  that 
the  Indian  owns  the  bow  which  he  has  made.  When- 
ever we  find  a  man  making  an  article  without  aid  from 
others,  we  instinctively  admit  that  it  belongs  to  him. 
The  most  practical  application  of  the  truth  that  one 
owns  the  result  of  his  own  labor  is  the  unexpected  one 
of  copyright.  The  Indian  takes  the  sapling  for  his  bow 
from  nature's  resources.  If  he  did  not  use  it,  some 
one  else  might ;  yet  we  all  agree  that  the  bow  belongs 
to  him.  The  result  of  the  author's  labor  is  an  arrange- 
ment of  words.  There  can  be  no  property  in  ideas* 
because  the  ideas  of  one  man  may  be  those  of  a  thou- 
sand others.  If  the  thinker  had  not  worked  out  his. 
thoughts  to-day,  another  might  have  discovered  the: 
same  mental  truth  to-morrow.  To  give  him  property 
in  his  idea  is  giving  him  a  monopoly  of  what  others; 
have  the  same  right  to  discover  as  himself.  But  the 
arrangement  of  the  words  of  a  book  is  purely  the  re- 

(181) 


182       OWNERSHIP   AND    CONTROL    OF    RESOURCES. 

suit  of  an  author's  labor.  What  is  more,  no  other 
man  would  ever  write  with  the  same  arrangement  of 
words.  A  book  is  therefore  purely  the  result  of  an 
author's  labor  which  conflicts  with  the  rights  and 
privileges  of  no  one  else.  There  can  be  no  higher 
right  of  property.  The  facts  that  there  has  been  so 
much  difficulty  in  recognizing  it — that  the  laws  do  not 
protect  one  in  his  possession,  at  least  for  life,  that 
there  is  so  great  a  difficulty  in  securing  international 
copyright — all  go  to  show  how  much  we  still  depencl 
on  force,  rather  than  right,  for  our  ideas  of  property. 
The  freebooter,  the  robber,  the  swindler,  who  gets  pos- 
session of  goods  and  holds  them  by  killing  anybody 
who  interferes  with  him,  is,  even  yet,  the  popular  ideal. 
Every  attempt  to  defend  property  on  the  ground  of 
force  leads  to  Socialism.  The  many  are  stronger  than 
the  one.  It  is  no  worse  for  the  people  to  plunder  the 
wealthy  man  than  for  individuals  to  gain  wealth  by  the 
plunder  of  society.  Unless  we  can  find  some  moral 
right  of  property,  we  may  as  well  abandon  it.  The 
right  of  an  author  is  one  where  force  does  not  come 
into  play,  and  is  therefore  one  of  the  best  tests  of  a 
nation's  honesty.  Let  the  farmer  or  the  capitalist  who 
refuses  to  support  the  moral  right  of  property  expect 
to  see  his  own  earnings  taken  by  organized  Socialism. 
The  proper  answer  to  his  complaint  would  be  :  "  Your 
theory  used  to  be  that  might  makes  property.  We 
have  the  might ;  hence  we  have  what  was  formerly 
yours."  The  many  are  stronger  than  the  few,  and 
organization  will  give  Socialists-  a  power  that  no  indi- 
vidual ever  had. 


OWNERSHIP    OF   PRODUCED    WEALTH.  183 

2.  In  tins  day  of  organized  production,  almost  all 
goods  are  made  in  factories,  and  hundreds  of  men  are 
often  engaged  in  the  production   of   a  single  article. 
This  can  not  affect  the  truth  that  the  article  belongs 
to  the  men  who  have  made  it ;  but  the  question  of  its 
division,  or  the  division  of  the  money  it  sells  for,  opens 
up  the  whole  subject  of  Distribution,  now  one  of  the 
most    important   in    Political   Economy.      By  Distri- 
bution we  mean    only  the    distribution  of    Produced 
Wealth — that  is  of  the  Productions  of  Human  Indus- 
try among  the  parties  to  whom  they  belong.     This  sub- 
ject will  be  considered  hereafter.     We  touch  it  here 
only  so  far  as  is  necessary  to  show  the  right  of  prop- 
erty in  general,  without  attempting  to  settle  the  share 
which  comes  to  each.     If  each  receives  the  share  to 
which  the  results  of  his  labor  entitle  him,  the  shares 
will  be  very  different. 

3.  The  total  product  of  a  factory  does  not  go  to  la- 
bor.    A  part  is  paid  to  capital,  and  it  is  necessary  to 
investigate  the  claim  of  the  capitalist  to  a  share.     A 
lone  fisherman  builds  a  boat,  with  extra  hours  of  labor. 
The  day's  catch,  he  knows,  is  due  in  part  to  the  posses- 
sion of  the  boat.     Two  men  who  are  fishing  on  the 
rocks  propose  to  go  with  him  in  the  boat  and  unite  in 
catching  fish.     Will  they  divide  the  catch  into  three 
equal  parts  ?     By  no  means.     All  will  recognize  that 
the  owner  should  have  something  for  the  use  of  his 
boat,   since   they  are  enabled  to  catch   more  fish  by 
means  of  it,  and  he  owns  the  boat  because  he  made 
it.     If  he  prefers  to  stay  on  shore,  the  other  two  will 
give  him  something  for  the  use  of  his  boat,  rather 


184       OWNERSHIP    AND    CONTROL    OF    RESOURCES. 

than  fish  without  it  or  stop  to  make  one.  The  boat  is, 
the  product  of  his  labor,  and  if  we  recognize  the  right 
of  property  we  must  see  that  the  owner  is  entitled  to- 
something  for  the  use  of  it.  This  division  was  com- 
mon in  the  catch  of  whaling-ships.  The  proceeds  were 
divided — a  certain  share  for  the  owners,  and  the  re- 
mainder among  the  men  who  had  done  the  work ;  the 
largest  share  for  the  captain,  and  a  fixed  share  for  each 
man,  as  previously  agreed  upon. 

4.  The  right  to  the  proceeds  of  one's  industry  car- 
ries with  it  the  right  to  exchange  this  product  for  oth- 
er goods.  But  exchange  gives  rise  to  opportunities  for 
fraud,  and  it  is  sometimes  against  the  interests  of  So- 
ciety. The  right  of  exchange  is  limited  by  the  gen- 
eral interests  of  Society,  and  title  to  property  acquired 
in  this  way  is  always  open  to  investigation.  To  acquire 
any  moral  right  to  property  by  exchange,  it  is  necessary 
that  the  exchange  be  between  equals.  If  not,  it  is  not 
really  an  exchange,  but  a  persuading  of  an  inferior  to 
make  a  gift.  William  Penn  showed  good  management 
in  giving  the  Indians  a  few  trinkets  for  their  land :  it 

O  O 

saved  him  trouble  and  prevented  bloodshed  ;  but  to  say 
the  trade  gave  him  any  moral  title  is  nonsense.  It 
would  be  as  correct  to  say  that  a  confidence  man  was 
entitled  to  the  fortune  which  a  child  had  inherited  be- 
cause the  child  had  agreed  to  give  it  to  him  for  sugar- 
plums. Moral  title  passes  only  when  exchanges  are 
fairly  made  between  equals,  and  when  some  propor- 
tional value  is  given  on  both  sides. 

The  right  to  property  acquired  by  exchange  is  not 
so  certain  as  to  that  produced  directly  by  the  owner,, 


OWNERSHIP    OF    PRODUCED    WEALTH.  185 

since  there  is  always  a  chance  that  the  exchange  is  only 
another  name  for  fraud.  A  shrewd  horse-trader  starts 
with  a  broken-down  beast,  and  ends  a  series  of  trades 
with  a  fine,  sound  animal ;  but  his  moral  right  to  the 
horse  is  not  quite  that  of  a  farmer  who  has  raised  a 
horse  from  a  colt.  Nevertheless,  property  would  be 
almost  worthless  without  the  right  of  exchange ;  and 
as  a  matter  of  expediency,  if  for  no  other  reason,  So- 
ciety must  protect  property  acquired  under  certain  reg- 
ulations, except  in  cases  of  fraud.  There  is  very  lit- 
tle of  the  Produced  Wealth  of  the  country  which  ha& 
not  changed  hands,  and  the  title  to  nearly  all  property 
rests  in  the  fact  that  one  has  got  it  by  trade  from  an- 
other. 

Property  is  not  robbery,  as  the  Socialists  would  have 
us  believe,  but  a  good  deal  of  what  passes  for  exchange 
is  little  better  than  robbery.  No  one  claims  that  all 
great  fortunes  made  by  buying  and  selling  stocks  and 
bonds  are  made  honestly.  The  dealer  sometimes  so 
manipulates  prices  as  to  make  the  matter  simply  rob- 
bery. It  becomes  one  of  the  highest  duties  of  govern- 
ment to  throw  all  possible  guards  about  such  transac- 
tions, to  punish  fraud,  and  to  give  opportunities  for 
losers  thereby  to  obtain  compensation. 

DISPOSITION  OF  PROPERTY  AFTER  DEATH.  —  The 
control  of  one  over  his  own  labor  and  all  property  ac- 
quired thereby  naturally  ceases  with  his  death.  Any 
further  disposition  of  it  which  he  desired  during  his 
lifetime  must  be  enforced  for  him.  The  right  of  one 
to  dispose  of  his  property  after  death  is  not  so  self-evi- 
dent as  it  may  at  first  seem,  and  has  not  been  so  gen- 


186       OWNERSHIP    AND    CONTROL    OF   RESOURCES. 

erally  acknowledged  as  the  right  01  property  during 
one's  lifetime.  In  many  countries,  the  disposition  of 
one's  property  after  death  has  been  carefully  fixed  by 
law,  so  that  he  had  very  little  control  over  it.  The 
right  of  bequest  has  been  more  fully  recognized  in  re- 
cent periods.  It  would  seem  that  any  full  right  of 
property  carries  with  it  the  right  to  give  it  to  whom 
one  pleases,  subject  to  such  conditions  as  the  welfare 
of  /Society  makes  it  necessary  to  impose.  As  the  right 
of  one  man  is  not  higher  than  that  of  another,  so  any 
use  of  property  which  is  an  evil  to  Society  may  justly 
be  forbidden.  That  is,  the  right  of  property  is  a  right 
of  possession,  but  the  right  of  its  use  is  limited  by  the 
rights  of  others.  If  there  is  any  reason  for  forbid- 
ding one  to  give  large  amounts  of  money  to  a  particular 
person,  Society  is  evidently  justified  in  prohibiting  such 
gift,  and  in  limiting  one's  power  in  using  or  disposing 
of  his  property  to  avenues  not  injurious  to  Society. 

The  right  to  give  away  property  during  lifetime,  or 
by  bequest  at  death,  does  not  imply  the  right  to  follow 
the  property  longer,  or  to  control  it  forever.  The  laws 
very  properly  impose  restrictions  intended  to  limit  one's 
control  to  a  comparatively  brief  period.  All  together, 
the  right  of  disposal  of  property  after  death  is  now 
greatly  limited  in  all  civilized  countries,  and  there  is 
reason  to  believe  that  a  still  further  limitation  would 
be  for  the  interest  of  all,  by  which  any  one  person 
should  not  take  by  bequest  more  than  a  given  sum. 
This  proposition  was  first  advanced  by  John  Stuart 
Mill,  who  made  a  distinction  between  the  privilege  of 
disposing  of  property  by  will  and  of  the  right  to  receive 


OWNERSHIP    OF   PRODUCED    WEALTH.  187 

property  by  bequest.  He  was  the  first  to  place  the 
limit  on  the  receiving.  As  countries  grow  wealthy, 
the  danger  of  the  accumulation  of  enormous  fortunes 
greatly  increases.  By  permitting  one  to  make  what 
disposition  of  his  property  he  pleases,  except  that  he 
can  leave  only  a  certain  amount  to  any  one  person,  he 
would  still  have  great  freedom  in  its  bestowal ;  but  the 
danger  of  great  inherited  fortunes  would  no  longer 
exist.  Such  laws  would  often  be  evaded,  and  the  limit 
imposed  exceeded,  but  they  would  have  something  to 
do  in  forming  public  opinion,  and  would  usually  be 
effective.  One  would  prefer  to  make  a  disposition  of 
his  property  within  the  limits  allowed  by  law,  rather 
than  run  the  risk  of  forfeiting  a  part  to  the  State. 

The  right  of  persons  to  receive  property  which  they 
have  not  produced,  and  for  which  they  have  given  no 
equivalent,  but  have  obtained  from  others  by  gift  or 
bequest,  is  a  right  strictly  limited  by  the  general  wel- 
fare of  Society.  If  it  is  agreed  that  large  fortunes  are 
an  injury,  it  is  certainly  proper  for  Society  to  limit  the 
fortune  one  may  receive  without  labor,  leaving  him  free 
to  add  to  it  to  any  extent  by  means  of  his  own  exertion. 
To  be  effective,  the  total  amount  which  he  should  be 
allowed  to  receive  during  his  lifetime  should  come  within 
the  limit  of  a  given  sum,  so  that  he  may  not  take  two 
or  three  fortunes  through  different  persons,  or  evade 
the  law  by  any  means.  If  such  a  sum  were  to  be  fixed, 
it  should  be  liberal,  and  in  a  country  like  this  a  million 
dollars  would  be  the  round  sum  most  likely  to  be 
named — a  sum  large  enough  to  enable  one  to  make  a 
liberal  provision  for  his  descendants  and  those  in  whom 


188       OWNERSHIP   AND    CONTROL    OF   RESOURCES. 

he  is  interested,  and  yet  small  enough  to  break  up  uii- 
Tisual  fortunes  as  often  as  they  may  be  accumulated. 

The   right  of   property  in  Produced  Wealth  then 
rests — 

(1)  On  one's  right  to  the  results  of  his  own  labor. 

(2)  His  right  to  a  share  in  what  he  produces  in 
co-operation  with  others. 

(3)  His  right  to  a  share  in  the  proceeds  of  any 
enterprise  in  return  for  the  use  of  capital  which  he  has 
saved,  and  which  is  used  in  the  enterprise. 

(4)  His  right  to  what  he  gets  by  exchange,  without 
fraud,  and  within  limits  which  Society  can  permit  with- 
out injury  to  itself. 

(5)  His  right  to  what  others  may  freely  give  him, 
or  what  he  may  obtain  by  bequest  or  inheritance  from 
deceased  persons,  such  right  being  subject  to  the  limita- 
tions which  the  general  interests  of  Society  may  impose. 


CHAPTER  V. 

CONTROL  OF  SOCIETY. 

Resources,  Population,  Who  shall  control  the  Re- 
•sources — this  is  the  order.  The  question  of  who  shall 
control  the  world's  resources  seems  naturally  to  precede 
that  of  the  best  or  most  economical  method  of  their 
use.  The  control  of  Labor,  Natural  and  Produced 
Wealth,  is  largely  one  of  ownership.  We  saw  that  a 
man  owns  his  own  labor,  and  discussed  the  ownership 
•of  Natural  and  Produced  Wealth.  The  control  of 
Society  does  not  involve  the  question  of  ownership, 
since  Society  is  not  the  subject  of  property.  The 
question  of  who  shall  control  it  is,  however,  as  impor- 
tant as  that  of  the  control  of  the  other  three  resources. 

The  control  of  Society  is  its  government.  The  ques- 
tion now  before  us  is  simply,  Who  shall  govern  ?  not, 
What  shall  the  government  undertake  ?  In  discussing 
Labor  and  Wealth  we  did  not  undertake  to  show  how 
these  should  be  used,  but  who  should  control  their  use  ; 
or  rather  who  should  own  them,  since  ownership  implies 
•control.  The  question  of  how  these  resources  can  best 
be  used  will  come  up  hereafter.  So,  now,  we  are  to 
consider  merely  who  shall  control  Society ;  the  ques- 
tion of  what  those  who  control  the  social  organization 
should  undertake  will  come  afterward. 

The  majority  of  men  do  not  care  so  much  how  they 
are  governed  as  that  they  are  well  governed.  There 

(189) 


190       OWNERSHIP   AND    CONTROL    OF   RESOURCES. 

is  no  natural  right  entitling  each  person  to  take  part 
in  the  government,  such  as  the  natural  right  of  each 
one  to  his  own  labor.  There  is  a  natural  right  of 
liberty ;  that  is,  of  each  one  to  govern  himself  and  do- 
as  he  pleases,  so  far  as  he  does  not  interfere  with  the 
equal  liberty  of  others.  There  is  no  natural  right  to 
take  part  in  this  ruling  of  Society.  Nothing  is  involved 
but  the  question  of  expediency.  How  can  we  get  the 
best  government — not  the  one  which  will  promote  the 
greatest  good  of  the  greatest  number ;  but  the  one  that 
will  protect  the  weakest  in  his  rights,  insure  justice  to 
all,  afford  the  best  opportunities  for  progress  to  all,  and 
do  the  best  for  Society  as  a  social  organization  ?  It  is 
not  necessary  here  to  consider  all  the  possible  forms  of 
government ;  all  that  need  to  be  noticed  are  included 
under  the  various  forms  of  a  republic,  or  a  constitu- 
tional monarchy,  in  which  a  large  part  of  the  people 
take  part  by  their  votes.  It  is  evident  that  every  man 
who  votes  is  an  actual  ruler.  To  confer  the  privilege 
of  suffrage  upon  any  individual  is  to  make  him  one  of 
the  rulers  of  the  nation,  one  of  those  who  control 
Society.  The  two  requisites  for  a  governing  power 
are  intelligence  and  honesty,  and  it  is  very  difficult  to 
unite  the  two  in  a  ruler.  One  man  like  George  Wash- 
ington, with  absolute  control,  might  be  able  to  give  a,, 
nation  a  better  government  than  with  universal  suf- 
frage. But  few  men  can  be  found  who  would  use  such 
power  for  the  benefit  of  the  people  and  the  enforce- 
ment of  strict  justice.  The  chances  of  getting  such  a 
man  for  a  king  are  small  indeed. 

The  difficulty  with  universal  suffrage  is  the  lack  of 


CONTROL    OF    SOCIETY.  191 

intelligence  and  knowledge.  The  vote  of  the  most 
ignorant  counts  as  much  as  that  of  the  competent 
ruler.  The  people  as  a  whole,  however  low  the  moral 
character  of  individuals,  or  even  a  majority  of  indi- 
viduals, are  more  likely  to  try  to  do  right  than  any 
narrower  governing  power — than  a  king  or  an  aristoc- 
racy. The  mass  of  the  people  is  more  honest  than 
the  individuals  which  compose  it.  The  danger  lies 
rather  in  ignorance.  It  used  to  be  thought  that  the 
ballot  would  be  a  great  educator,  but  with  the  power 
of  the  modern  demagogue  its  benefit  is  more  than 
doubtful.  The  object  of  the  leader  is  to  get  into 
power.  By  the  vehemence  of  public  speech,  the  mdst 
dangerous  ideas  are  fastened  on  the  people,  which  are 
not  shaken  off  in  a  generation.  If  any  limitation  is 
to  be  imposed  on  the  privilege  of  suffrage,  it  should  be 
that  of  education.  A  class  which  can  have  no  hope 
of  ever  taking  part  in  public  affairs  may  be  dangerous 
to  the  State,  and  the  situation  of  its  members  is  an 
unspeakably  cruel  one.  But  an  educational  qualifica- 
tion, not  so  high  as  to  forever  bar  out  any  man  of 
sound  mind  who  chooses  to  prepare  himself  for  it> 
would  be  no  hardship,  and  would  act  as  a  powerful 
stimulant  to  the  voter's  real  ability  to  help  rule.. 
Suppose  the  requirement  to  be  a  knowledge  of  the 
branches  usually  taught  in  the  common  schools.  Therei 
is  no  one  who  could  not  master  them  some  time  in  his. 
life,  if  he  chose  to  exert  himself.  Such  a  rule,  in  the^ 
United  States,  might  at  first  disfranchise  half  the 
voters;  but  who  can  doubt  that  it  would  give  us  a 
government  far  better  for  all  those  who  were  disfran- 
13 


192       OWNERSHIP   AND    CONTROL    OF    RESOURCES. 

cliised  as  well  as  the  others?  The  moral  standard 
would  be  no  lower,  and  the  average  intelligence  of  the 
voting  population  would  be  vastly  increased.  An  en- 
tirely different  set  of  men  would  be  chosen  as  repre- 
sentatives. So  far  as  those  who  were  disfranchised  are 
concerned,  they  can  be  divided  into  two  classes :  first, 
those  who  feel  it  something  of  a  disgrace  to  be  de- 
prived of  the  privilege  of  voting  ;  and,  second,  those 
who  care  nothing  about  it.  The  first  class  would  com- 
ply with  the  educational  requirement  within  a  few 
years.  The  prize  of  the  suffrage  would  do  more  to 
make  education  universal  and  popular  than  any  other 
possible  influence.  As  regards  those  who  do  not  care 
enough  for  the  suffrage  to  obtain  the  requisite  knowl- 
edge, it  is  safe  to  say  that  they  will  not  be  deeply  con- 
cerned over  the  loss  of  the  right  to  vote.  The  chief 
-care  should  be  that  no  impossible  standard  is  set  up,, 
and  no  man  deprived  of  the  suffrage  who  has  the  will 
to  obtain  it. 

So  far  as  the  experience  of  the  world  has  taught  us, 
we  may  believe  that  among  civilized  nations  the  best 
form  of  government  attainable  will  be  one  where  the 
power  resides  in  the  votes  of  a  very  large  body  of  the 
people  ;  and  that  the  only  requirements  of  the  suffrage 
should  be  intelligence,  common  morality,  and  such 
education  as  is  in  the  power  of  each  to  obtain,  at  some 
period  of  his  life,  if  not  at  the  earliest  age  fixed  for 
the  casting  of  a  vote.  The  question  of  the  advisa- 
bility of  inviting  woman  to  take  part  in  the  govern- 
ment need  not  be  discussed  here.  It  probably  depends 


CONTROL    OF    SOCIETY.  193 

on  the  answers  to  two  questions :  First,  would  it  give 
us  a  better  government  ?  Second,  would  it  be  best  for 
woman? 

Having  noticed  the  more  important  principles  con- 
nected with  the  ownership  and  control  of  each  of  the 
four  classes  of  resources,  we  should  in  this  chapter 
return  for  a  moment  to  the  question  of  Socialism,  since 
it  has  as  much  to  do  with  the  control  of  Society  as 
with  the  ownership  of  property. 

Socialism  is  government  action  which  practically 
prohibits  every  individual  from  engaging  in  Production 
or  Exchange  on  his  own  account.  The  difference  be- 
tween government  management  of  all  the  business  of 
the  country,  or  only  certain  lines  of  it,  is  radical.  In 
the  one  case  the  government  enters  a  field  occupied  by 
thousands  of  others,  leaving  them  as  free  as  before ; 
in  the  other,  it  drives  all  private  enterprise  out,  and 
takes  the  whole  field  to  itself.  The  mere  management 
of  a  few  public  interests  by  the  government  does  not 
shut  out  private  enterprise.  Schools,  to  be  sure,  stand 
on  a  somewhat  different  footing  from  Production  and 
Exchange,  but  the  public  schools  of  the  United  States 
do  not  prevent  great  numbers  of  private  schools.  The 
post-office  does  not  prevent  the  express  companies  from 
carrying  matter  that  might  go  by  mail.  It  is  always 
well  to  have  the  possibility  of  competition  of  private 
parties  with  government  business.  But  even  if  the 
government  has  a  monopoly  in  certain  enterprises,  it 
leaves  all  the  other  business  free  to  the  citizen.  The 
burden  of  proof  is  on  those  who  advocate  government 


194      OWNERSHIP   AND    CONTROL    OF   RESOURCES. 

control  of  any  specified  business.  The  lines  of  busi- 
ness which  may  properly  come  under  the  direct  con- 
trol of  the  government  are  comparatively  few,  and 
are  likely  to  involve  large  interests.  They  are  pre- 
cisely those  which  would  otherwise  be  carried  on  by 
great  corporations,  and  probably  by  monopolies.  All 
other  lines  of  business  remain,  and  are  so  numerous 
that  they  form  in  the  aggregate  by  far  the  greater 
part  of  all  the  productive  business  of  the  country. 
Suppose  that  all  natural  monopolies  were  turned  over 
to  public  management — that  street-car  lines,  and  even 
railways,  were  run  by  government  officials,  as  they  are 
in  many  countries  in  Europe.  How  much  would  this 
interfere  with  the  opportunity  of  the  ordinary  citizen  ? 
He  would  probably  have  a  better  chance  than  before, 
since  the  government  must  treat  all  alike,  and  large 
corporations  would  not  be  able  to  crush  out  the  smaller 
by  reason  of  discrimination  in  freight  rates.  People 
may  well  say  that  when  a  business  gets  so  large  as  to 
number  thousands  of  stockholders,  managed  by  officers 
elected  by  their  votes,  especially  if  it  is  of  such  a  na- 
ture that  there  can  be  no  competition,  it  would  better 
be  managed  by  the  government.  It  may,  or  may  not, 
be  wise  for  the  government  to  extend  its  business  op- 
erations :  that  is  another  question.  What  we  wish  ta 
emphasize  here  is  the  radical  difference  between  shut- 
ting the  citizen  out  of  all  business  and  the  admission 
of  the  government  as  another  business  firm — a  busi- 
ness firm  which  competes  only  with  the  large  corpora- 
tions, likely  to  become  monopolies ;  and  which  in  any 
case  leaves  the  field  as  free  to  the  ordinary  citizen  as> 


CONTROL    OF   SOCIETY.  195 

l>efore.  Socialism  is  distinguished  from  all  other  or- 
ganizations of  society.  Its  characteristic  is  that  it 
-shuts  out  the  citizen  from  production,  not  that  it  ad- 
mits the  government  to  some  departments.  Socialism 
•demands  that  all  the  instruments  of  production  shall 
be  owned  by  the  State,  It  is  here  that  it  is  irrecon- 
cilably opposed  to  Individualism.  It  allows  within 
•certain  limits,  it  is  true,  the  use  by  each  one  of  his 
income  in  his  own  way  ;  but  in  Production  and  Ex- 
change it  permits  no  independent  action,  and  here 
absolutely  destroys  Individualism. 

There  are,  indeed,  three  well-marked  schools  of 
thought:  first,  the  laissez  faire,  composed  of  those  who 
would  make  the  government  merely  a  police  force ;  sec- 
ond, those  who  would  have  it  undertake  such  lines  of  busi- 
ness as  experience  shows  can  be  much  better  managed 
by  public  than  by  private  enterprise,  and,  under  general 
regulations,  compel  all  private  business  to  be  conduct- 
ed in  a  way  that  will  not  interfere  with  the  highest  in- 
terests of  the  whole  people ;  and  third,  the  Socialists, 
who  destroy  all  individual  enterprise,  prohibit  the  in- 
dividual from  engaging  in  business,  and  have  every- 
thing done  by  the  State.  The  difference  between  the 
last  two  schools  is  a  hundred  times  as  great  as  between 
the  second  and  the  first.  It  would  be  as  great  a  mis- 
take to  call  the  second  Socialists  as  to  class  them  with 
the  laissez  faire  school. 

As  in  other  instances,  extremes  meet.  Socialists 
and  men  of  the  laissez  faire  school  unite  in  the  claim 
that  everything  which  is  not  laissez  faire  is  Social- 
ism. The  former  wish  to  gain  adherents  by  represent- 


196       OWNERSHIP   AND    CONTROL    OF   RESOURCES. 

ing  that  the  difference  is  only  one  of  degree.  The 
laissezfaire  school  hope  to  prevent  any  further  exten- 
tion  of  government  powers  by  crying  "  Socialism !  " 
The  cry  was  for  a  time  effective.  It  was  easier  ta 
make  people  believe  that  the  management  of  a  street- 
car line  by  a  city  "  is  only  a  step  toward  Socialism," 
which,  if  taken,  "  other  steps  are  sure  to  follow,"  than 
to  discuss  the  question  on  its  merits.  But  the  cry  has 
now  come  to  have  the  reverse  effect  from  that  intend- 
ed, and  has  done  immeasurable  injury.  People  have 
reasoned,  "  If  municipal  control  of  gas-works  is  So- 
cialism, Socialism  must  be  a  good  thing."  This  indis- 
criminate attack  by  the  laissez  faire  school  on  enter- 
prises which  the  people  are  coming  to  approve,  is  one 
of  the  causes  for  the  remarkable  increase  in  the  num- 
ber of  good  men  who  call  themselves  Socialists.  Now 
the  great  mass  of  common-sense  men,  who  are  neither 
Socialists  nor  in  favor  of  letting  everything  alone  until 
it  goes  to  destruction,  need  to  define  their  position. 
They  must  not  allow  themselves  to  be  classed  with  So- 
cialists, Christian  or  any  other  kind.  They  are  to  say 
that,  while  we  do  not  believe  in  unnecessary  interfer- 
ence with  private  business,  we  do  not  intend  to  let  em- 
ployers alone  who  work  children  under  ten  years  of 
age  in  factories.  We  do  not  intend  to  let  the  father 
alone  who  is  breaking  down  the  health  of  his  child,  ta 
throw  it,  when  a  man,  a  burden  on  society.  We  do 
not  intend  to  let  a  corporation  alone  that  is  unduly 
oppressive  to  the  people.  We  propose  to  move  care- 
fully, but  we  have  no  hesitation  in  giving  the  control  of 
any  business,  like  the  post-office,  to  the  government 


CONTROL    OF    SOCIETY.  197 

when  there  is  good  reason  to  believe  it  will  be  for  the 
best  interests  of  the  people.  We  should  show  that 
none  of  these  things  are  in  any  way  related  to  Social- 
ism;  that  the  management  of  natural  monopolies  by 
the  government  is  not  Socialism  ;  that  the  government 
of  Germany,  which  owns  the  railroads,  is  not  Social- 
ism ;  and  that  the  city  of  Paris,  as  now  governed,  is 
not  a  socialistic  organization.  They  should  indig- 
nantly refuse  to  be  classed  with  Socialists,  because  So- 
cialism is  utterlv  opposed  to  their  spirit. 

There  can  be  nothing  more  unfortunate  than  for  the 
people  to  suppose  that  control  of  some  natural  monopo- 
lies by  the  government,  means  that  all  private  enter- 
prise shall  be  abandoned.  It  is  only  the  intellectually 
weak  man  who  fears  that  the  doing  of  some  things  in- 
volves the  doing  of  everything. 

There  is  no  doubt  that  the  minds  of  the  people  have 
been  somewhat  confused  on  this  subject ;  and  that  many 
advocates  of  government  control  of  such  public  under- 
takings as  seem  necessary,  fear  that  they  are  Socialists. 
They  are  nothing  of  the  kind.  Neither  is  a  govern- 
ment which  engages  in  necessary  public  undertakings, 
in  as  much  danger  of  becoming  socialistic  as  one  man- 
aged on  the  "  let  alone  "  principle.  One  extreme  tends 
to  drive  people  to  the  other.  When  the  mass  of  the 
people  understand  that  the  highest  Individualism  does 
not  prevent  the  government  from  undertaking  any- 
thing which  is  shown  to  be  for  the  best  interests  of  the 
public,  does  not  prevent  regulations  for  the  humane 
treatment  of  children,  or  designed  to  secure  their  edu- 
cation, the  converts  to  Socialism  can  never  become 


198       OWNERSHIP   AND    CONTROL    OF   RESOURCES. 

numerous  enough  to  enslave  society.  Socialism  is  to 
be  fought  on  the  ground  of  its  tyranny,  its  proposal  to 
enslave  the  minority  by  the  power  of  the  majority,  and 
its  attempt  to  prevent  the  individual  from  engaging  in 
Production  or  Exchange. 


BOOK  IV. 

ECONOMICAL  USE  OF  THE  RE- 
SOURCES. 


BOOK  IV. 

ECONOMICAL  USE  OF  THE  RESOURCES. 

INTRODUCTION, 20L 

CHAPTER      I.     THE  ECONOMICAL  USK  OK  LABOR,      .     .  203 

PART      I.     The  Constant  Employment  of  Labor,     .     .  203 

PART    II.     The  Irksomeness  of  Labor, 209 

PART  III.     The  Division  of  Labor, 214 

PART  IV.     The  Development  of  Labor  Power,  and  the 

Prohibition  of  Certain  Forms  of  Labor,  221 

CHAPTER    II.     ECONOMICAL  USE  OK  THE  RESOURCES   OK 

NATURE, 225 

PART      I.     Permanent  Natural  Resources,     ....  225 

PART    II.     Consumable  Natural  Resources,     .     .     .  231 
PART  III.     Public  and  Private  Use  of  the  Resources 

of  Nature, 234 

CHAPTER  III.     ECONOMICAL  USE  OF  PRODUCED  WEALTH,  242 

CHAPTER  IV.     THE  USE  OF  THE  RESOURCE  OF  SOCIETY,  252 

CHAPTER    V.     THE     PURPOSES     FOR    WHICH     THE    RE- 
SOURCES SHALL,  BE  USED,    ....  25$ 


BOOK  IV. 

ECOKOMICAI,  USE   OF  THE   RE- 
SOURCES. 

This  subject  is  not  the  same  as  "  Production "  in 
the  older  books  on  Political  Economy,  but  includes  it. 
Our  point  of  view  is  entirely  different  from  that  of  the 
older  political  economists.  They  treated  of  the  "Pro- 
duction of  Wealth,"  its  Distribution  and  Exchange ; 
we  are  treating  of  the  Satisfaction  of  Human  Wants. 
Many  of  these  wants  are  satisfied,  directly,  by  labor 
without  the  intervention  of  wealth  at  all.  The  teacher, 
singer,  preacher,  as  well  as  most  persons  engaged  in 
personal  service,  satisfy  wants  directly,  instead  of  by 
the  roundabout  way  of  producing  something  which 
shall  afterward  be  used  in  their  satisfaction. 

The  economical  use  of  the  Resources  is  of  even 
more  importance  than  their  extent.  Our  Resources 
are  greater  than  in  former  times.  We  have  dis- 
covered many  Resources  of  Nature  unknown  to  the 
past;  the  power  of  labor  is  greater  in  proportion  to 
the  population ;  and  the  accumulations  of  Produced 
Wealth  are  vastly  larger,  but  the  better  satisfaction  of 
wants  is  due  as  much  to  modern  methods  of  using  the 
Resources  as  to  their  increase.  Not  only  are  wants 

(201) 


202          ECONOMICAL    USE    OF   THE   KESOURCES. 

letter  satisfied,  but  the  world  is  able  to  provide  for 
far  larger  numbers  of  people.  Methods  of  using  the 
Kesources  also  determine  to  some  extent  whose  wants 
shall  be  satisfied,  irrespective  of  the  question  of  the 
ownership  of  property.  In  Book  I.  we  saw  what  Ke- 
sources a  nation  has  for  the  satisfaction  of  the  wants 
of  its  people ;  in  Book  II.  we  considered  the  number 
of  people  whose  wants  are  to  be  satisfied ;  in  Book 
III.,  the  ownership  or  control  of  these  Resources  ;  and 
we  now  come  to  the  question  of  their  practical  use  in 
satisfying  the  wants  of  the  people  of  a  nation. 

We  shall  find  that  the  simplest  plan  is  to  treat  of 
the  use  of  each  Resource  separately.  Such  treatment 
can  be  only  of  general  principles.  The  detailed  use 
of  the  Resources  must  be  determined,  each  one  for 
himself ;  and  skill  in  details  brings  fortunes  to  many. 
We  can  not  pursue  the  subject  so  as  to  determine  how 
a  farm  or  a  factory  should  be  carried  on.  This  re- 
quires a  knowledge  of  business,  of  thousands  of  minor 
matters.  Few  men  can  learn  more  than  one  line  of 
production.  But  there  are  certain  fundamental  prin- 
ciples, such  as  a  statesman  should  understand,  which 
underlie  all  business,  all  methods  of  production,  and 
all  methods  of  satisfying  wants. 

We  may  take  up  the  four  great  classes  of  Resources 
in  any  order,  but  it  will  be  more  convenient,  as  in  the 
last  book,  to  begin  with  Labor. 


CHAPTEK  I. 

THE  ECONOMICAL  USE  OF  LABOR. 
PART  I. — THE  CONSTANT  EMPLOYMENT  OF  LABOR, 

The  first  requirement  for  the  economical  use  of  labor 
is  to  use  it — to  provide  for  the  constant  employment  of 
all  the  labor  of  a  country.  No  waste  is  so  great  as- 
that  of  idleness.  The  chief  misfortune  of  financial 
panics,  and  of  a  change  in  the  value  of  money,  is  that 
multitudes  of  men  are  thrown  out  of  employment,  and 
fill  the  country  with  an  army  of  idlers  or  tramps.  The 
work  that  these  men  might  have  done  is  so  much  loss. 
The  loss  from  the  idleness  of  a  thousand  men  is  just  a& 
real  as  that  from  the  destruction  of  a  million  dollars' 
worth  of  property  by  fire.  This  explains,  in  part,  why 
a  country  sometimes  seems  to  recover  so  quickly  from 
disasters.  Let  us  suppose  a  part  of  a  city  to  be  burned. 
Here  is  a  real  loss  of  Produced  Wealth.  The  city 
must  be  built  up  again,  and  the  burned  structures  may 
be  replaced  by  new  which  are  even  better  than  the 
old.  Here  is  a  call  for  additional  labor.  If  there  are 
thousands  of  idle  men  all  over  the  country  willing  to 
work  for  pay,  they  may  be  at  once  employed.  Some 
will  be  put  at  work  in  the  city  where  the  loss  occurred; 
others  will  be  added  to  the  working  force  of  mills  in 
other  parts  of  the  country,  for  the  production  of  build- 
ing material,  builders'  hardware,  glass — every  one  of 
the  thousands  of  articles  which  go  to  replace  the  build- 
ings destroyed.  The  additional  work  will  not  all  be 

(203) 


204  ECONOMICAL    USE    OF    THE   RESOURCES. 

clone  by  new  men.  Factories  which  were  running  011 
short  time  may  now  increase  their  hours  of  labor. 
When  the  city  is  rebuilt,  if  we  could  trace  the  pro- 
cesses, we  might  find  that  it  was  all  extra  work ;  that 
is,  hours  of  labor  which  would  not  have  been  put  in 
had  there  been  no  fire.  The  balance  sheet  of  the 
country  may  show  as  well  at  the  end  of  the  rebuilding 
as  before  the  fire.  There  has  been  a  great  loss  ;  but 
there  has  been  an  equal  gain  in  additional  labor  per- 
formed. The  loss  has  been  replaced  by  men  who 
would  otherwise  have  been  idle,  or  worked  fewer 
hours.  There  has  been  a  shifting  of  property.  The 
owners  of  the  buildings  have  lost,  and  the  workmen 
of  the  country  have  gained. 

We  have  assumed  that  there  was  a  large  body  of 
men  out  of  employment,  or  of  men  who  would  work 
more  hours.  On  the  contrary,  if  all  men  were  at 
work  before  the  fire,  and  the  city  is  rebuilt  by  labor 
taken  from  some  other  form  of  production,  the  country 
is  so  much  the  poorer.  The  single  truth  now  before  us 
is,  the  misfortune  of  the  idleness  of  large  numbers  of 
men.  Labor  is  a  Resource  for  the  Satisfaction  of 
Wants  which,  if  not  used  to-day,  is  lost;  since  the 
work  that  would  have  been  done  to-day  can  not  be 
done  to-morrow.  Every  month  of  enforced  idleness  is 
so  much  loss  to  the  country. 

For  it  must  be  remembered  that  one  must  live 
whether  he  works  or  not ;  if  he  has  nothing  saved,  he 
must  borrow  ;  if  he  can  not  borrow,  he  must  live  on  the 
charity  of  others.  The  view  of  some  of  the  English 
political  economists  has  been  too  much  that  of  the 


ECONOMICAL    USE    OF    LABOR.  205 

manufacturer,  who  counts  only  the  wages  he  pays ;  if 
he  shuts  down  his  factory,  he  saves  the  wages.  When 
we  stop  a  steam-engine  we,  at  least,  save  the  coal,  but 
when  a  man  ceases  work  he  does  not  save  the  necessity 
of  food.  Practically,  it  costs  the  same  for  him  to  live 
whether  he  works  or  not.  It  is  true  that  men  do  live 
on  less  ;  but  that  is  because  one  never  knows  on  how 
little  he  can  live  until  he  is  obliged  to  make  the  ex- 
periment. He  might  live  in  the  same  way  when  he  is 
at  work,  and  save  the  difference  between  the  lowest 
cost  of  living  and  his  wages.  He  requires  a  little 
more  food  when  at  work,  but  the  increased  cost  is  not 
enough  to  be  taken  into  account.  It  is  also  true  that 
many  men  when  they  lose  employment  at  one  kind  of 
labor  do  not  actually  cease  to  work,  but  earn  a  smaller 
sum  in  some  other  way,  or  by  labor  at  home  reduce 
their  family  expenses.  But  the  cost  of  living  depends 
very  slightly  on  whether  one  is  at  work  or  not ;  hence 
if  he  is  doing  nothing,  the  present  available  resources 
for  the  satisfaction  of  wants  are  so  much  less.  The  first 
requirement  for  the  use  of  labor  power,  then,  is  that  it 
be  constantly  employed.  As  a  practical  country  mer- 
chant observed,  "  I  have  always  noticed  that  where  all 
the  people  worked,  and  were  economical,  they  got 
rich  or  well-to-do."  The  steady  power  of  continuous 
labor,  year  after  year,  tells. 

It  is  of  the  utmost  importance,  then,  that  every 
man  has  a  chance  to  work  when  he  desires,  under  con- 
ditions which  will  give  him  at  least  the  greater  part  of 
the  results  of  his  own  labor.  Society  has  in  some  way 
to  keep  all  persons  from  starving,  whether  they  work 


206  ECONOMICAL    USE    OF    THE    RESOURCES. 

or  not.  A  few  are  supported  by  charity,  and  a  few 
live  by  robbery ;  but  it  would  be  better  if  all  were  em- 
ployed in  useful  labor. 

The  people  are  the  purchasers.  The  fact  that  great 
numbers  are  out  of  employment  prevents  their  purchas- 
ing, and  leaves  .stocks  of  goods  on  hand.  Producing 
must  be  stopped  until  the  stocks  are  worked  off.  It 
is  like  a  row  of  bricks.  Each  set  of  men  is  knocked 
doprn  one  after  another, "and  there  is  no  market  for 
anything,  because  nobody  is  producing  anything,  and 
has  nothing  to  buy  with.  So  long  as  human  wants  are 
unsatisfied,  there  should  be  opportunity  for  the  em- 
ployment of  men.  Suppose,  in  a  panic  when  thou- 
sands of  men  can  find  nothing  to  do,  we  should  send  to 
each  one  and  ask  him  what  he  would  buy  if  he  had  the 
money !  Now  suppose  we  put  this  army  of  the  unem- 
ployed to  producing  just  those  commodities — to  satis- 
fying their  own  wants !  These  men  would  be  at  work, 
and  these  wants  would  be  supplied.  The  workmen  are 
the  consumers ;  they  are  their  own  market.  It  costs 
them  no  more  to  live  when  at  work  than  when  idle,  and 
proper  statistics  should  show  where  labor  is  most  need- 
ed. We  may  be  sure  that  it  is  needed  somewhere  so 
long  as  any  wants  remain  unsatisfied. 

The  direction  of  production  is  now  mainly  deter- 
mined by  the  demand  for  goods  at  certain  prices ;  but 
the  falling  off  in  the  demand  does  not  show  itself  until 
production  has  been  carried  too  far  in  one  direction. 
It  sometimes  seems  as  though  there  is  no  demand  for 
any  goods,  that  the  market  in  every  line  is  overstocked; 
yet  we  have  at  the  same  time  idle  men  who  want  these 


ECONOMICAL   USE   OF   LABOR.  207 

very  goods,  but  have  nothing  to  buy  with.  There  is 
capital  enough ;  the  men  must  have  food  and  clothing 
in  any  case,  but  no  business  man  sees  his  way,  from 
the  demand  and  supply  of  the  market,  to  undertake  to 
set  them  at  work  at  anything.  The  ordinary  facts  of 
demand  and  supply  at  certain  prices  need  to  be  supple- 
mented by  public  statistics  which  will  help  to  show 
where  these  men  can  be  put  to  work  with  profit. 
They  should  be  producing  something  to  exchange  for 
the  surplus  stocks  of  goods  which  burden  the  shelves  of 
the  merchant.  The  difficulty  is  not  in  a  lack  of  desire 
for  the  goods,  but  in  the  fact  that  idle  men  are  unable 
to  exchange  their  labor  for  them. 

Financial  panics  are  the  means  of  throwing  large 
numbers  of  men  out  of  employment,  and  panics  are  fre- 
quently due  to  a  change  in  the  value  of  money.  Even 
if  there  is  no  panic,  when  the  value  of  money  is  steadily 
increasing  and  the  prices  of  goods  falling,  men  hesi- 
tate to  engage  in  business.  An  increase  in  the  value 
of  money  is  the  same  as  a  fall  in  the  price  of  goods. 
Now,  when  the  prices  of  all  goods  are  falling,  men  are 
afraid  to  manufacture.  By  the  time  the  returns  are 
to  be  expected  the  goods  will  be  worth  less,  and  a  fall 
in  price  will  absorb  the  profits.  No  one  knows  how 
great  the  fall  will  be.  Everybody  is  cautious.  Em- 
ployers try  to  keep  on  the  safe  side,  but  while  they  are 
on  the  safe  side  thousands  of  men  are  idle  because  they 
can  find  nothing  to  do.  Business  men  are  on  the  safe 
side  because  they  fear  a  change  in  the  value  of  money. 

Labor  unions  and  strikes  are  a  cause  of  idleness. 
Let  us  suppose  that  a  strike  succeeds :  the  country  has 
14 


208          ECONOMICAL    USE    OF   THE   RESOURCES. 

nevertheless  lost  so  much  by  the  long  period  of  idle- 
ness on  the  part  of  the  men.  Suppose  that  the  strik- 
ers are  maintained  by  the  contributions  of  other  men 
of  their  class ;  and  that,  by  reason  of  the  labor  un- 
ions, these  contributing  members  do  get  higher  wages, 
so  that  the  limited  number  of  men  at  work  actually 
receive  as  much  in  wages  as  would  the  entire  body  of 
workmen,  strikers  included.  Nevertheless,  the  country 
has  lost  the  labor  of  the  idle  men,  and  they  have 
gained  nothing.  They  are  no  better  off  under  the  anx- 
iety of  the  strike  than  if  they  had  been  constantly  em- 
ployed. The  people  have  lost  by  the  strike,  and  the 
workmen  have  gained  nothing.  Idleness  is  waste,  and 
unfortunate,  whether  it  comes  by  commercial  panics, 
when  employers  are  compelled  to  shut  down  their  mills, 
or  by  strikes  in  good  times,  when  men  refuse  to  work. 

The  opportunity  for  more  constant  employment  of 
labor  may  be  found  in  co-operation,  in  which  the 
workmen  own  the  business  ;  and  perhaps  a  large  part, 
if  not  all,  the  capital  with  which  it  is  carried  on.  If 
they  owned  the  land,  the  building,  the  machinery,  and 
other  capital  necessary,  they  would  come  as  near  being- 
independent  as  is  possible.  In  dull  times  the  returns 
to  their  labor  would  be  less,  but  they  would  at  least 
have  something  to  do,  and  get  all  they  make.  I  re- 
alize the  difficulties  of  co-operation  as  fully  as  any  of 
those  who  think  it  impracticable,  but  the  security  of 
employment  counts  for  much. 

Labor  should  also  be  used  without  waste  of  strength. 
Some  men  will  expend  twice  as  much  energy  as  others 
in  accomplishing  the  same  result.  This  is  as  true  of 


ECONOMICAL    USE   OF   LABOR.  209 

mental  labor  as  of  physical.  There  are  a  few  who 
have  learned  to  think  directly  about  the  subject  in 
liand,  and  about  nothing  unnecessary  to  it.  Other  per- 
sons are  obliged  to  settle  many  preparatory  and  inci- 
dental questions  before  they  come  to  the  real  one. 
Such  men  must  cut  down  a  whole  forest,  and  examine 
each  tree,  to  get  the  one  piece  of  timber  they  want. 

WASTED  LABOR. — It  is  assumed  that  labor  is  to  be 
economically  employed  for  the  satisfaction  of  wants. 
Labor  may,  however,  be  wasted,  when  the  loss  is  as 
great  as  that  of  idleness.  One  may  work  hard  all  day 
in  carrying  stones  across  the  road  and  back  again,  but 
the  world  is  no  better  off,  and  no  more  wants  are  sat- 
isfied than  if  he  sat  still  by  the  roadside.  There  is  un- 
doubtedly a  great  deal  of  wasted  labor  in  consequence 
of  misdirected  effort.  Goods  are  produced  which  no- 
body wants,  or  are  made  so  poorly  from  lack  of  skill 
and  knowledge  that  they  are  useless. 

We  have  little  conception  of  the  wasted  labor  in  the 
world.  The  employer  who  turns  it  in  the  direction 
where  it  is  all  of  use,  has  saved  to  the  world  all  that 
would  otherwise  have  been  wasted,  which  may  be  half 
of  all  the  labor  he  employs.  All  that  has  been  said 
about  the  importance  of  the  constant  employment  of 
labor  has  no  force  except  with  the  implied  assumption 
that  the  labor  is  to  be  used  for  practical  purposes,  and 
shall  aid  in  satisfying  wants. 

PART  II. — THE  IRKSOMENESS  OF  LABOR. 

The  desire  for  leisure  is  as  real  as  any  want  we  have 
to  satisfy.  Most  men  dislike  to  work,  and  are  looking 


210     ECONOMICAL  USE  OF  THE  RESOURCES. 

forward  to  more  leisure,  and  would  be  glad  of  shorter 
hours.  Thus  far  we  have  considered  labor  power  simply 
as  any  other  force  which  can  be  used.  If  all  men  pre- 
ferred labor  to  leisure,  we  should  have  only  to  consider 
how  to  get  the  most  accomplished  by  the  members  of 
a  given  society.  But  the  workman  embodies  in  him- 
self both  the  labor  power  and  the  wants  to  be  satisfied. 
All  through  the  world's  history  there  has  been  an  effort 
to  have  one  class  work,  and  another  class  eat,  thus 
completing  the  circle  of  Political  Economy.  The 
smaller  class  which  ate,  was  indifferent  to  the  larger 
class  which  worked.  The  modern  conception  is  of  a 
people  nearly  all  of  whom  are  engaged  in  some  eco- 
nomic labor ;  that  is,  in  an  effort  to  satisfy  wants  by 
the  use  of  muscle  or  mind,  or  both.  Where  all  the 
people  work,  we  have  no  wants  except  the  wants  of 
the  laborers ;  and  one  of  these  wants  is  more  leisure 
—  shorter  hours,  longer  vacations,  less  labor.  The 
question  is,  how  far  we  shall  ever  be  able  to  satisfy 
this  general  desire  for  leisure,  and  at  the  same  time 
satisfy  the  numerous  other  wants ;  and  how  this  desire 
for  leisure  compares  in  importance  with  other  wants. 
When  it  is  a  question  of  food  and  raiment  for  one's- 
self  or  family,  the  common  opinion  of  Americans  holds 
up  to  scorn  the  man  who  is  unwilling  to  work  for  them 
to  the  extreme  of  his  ability  without  physical  injury. 
But  there  are  many  who  hold  that  the  provision  of  the 
common  comforts  of  life  ought,  in  the  present  stage 
of  civilization,  to  leave  some  leisure  to  the  workman. 
We  observe  that  most  labor  becomes  more  disagree- 
able as  the  hours  per  day  are  increased.  There  is 


ECONOMICAL    USE   OF   LABOR.  211 

indeed  a  very  general  conviction  that  a  certain  amount 
of  work  is  for  one's  benefit.  Although  one  may  desire 
leisure  for  the  time  being,  his  judgment  tells  him  that 
for  most  men,  and  probably  for  himself,  continuous 
employment  for  say  five  hours  a  day,  six  days  in  the 
week  and  forty  weeks  in  the  year,  would  be  better 
than  idleness.  Eight  hours  is  more  than  twice  as 
irksome  as  four,  and  twelve  more  than  twice  as  irksome 
as  eight.  So  far  as  mere  results  are  concerned,  it  is 
now  the  opinion  of  those  who  have  collected  the  fullest 
statistics  on  the  subject  that,  in  the  average  of  mechani- 
cal trades  and  shopwork,  the  maximum  result  is  ac- 
complished by  about  eleven  hours  of  labor  per  day. 
A  farmer  with  a  great  variety  of  duties  in  the  open 
air,  including  the  care  of  his  stock  and  what  are  called 
"  chores,"  may  perhaps  accomplish  more  in  sixteen 
hours  than  in  less.  But  with  the  intense  strain  of  the 
factory,  nearly  all  men  will  do  more  in  twelve  hours 
than  in  sixteen,  and  in  many  instances  more  in  ten 
than  in  twelve.  There  are  a  few  employments  in 
which  one  can  accomplish  more  in  less  than  ten  hours, 
but  not  many.  So  far  as  the  results  of  labor  are  con- 
cerned, the  present  hours  of  labor  in  most  employments 
probably  enable  the  workman  to  accomplish  the  maxi- 
mum amount.  A  further  reduction  in  the  hours  must 
be'for  the  purpose  of  satisfying  the  desire  for  leisure — 
as  real  a  want  as  any  beyond  the  mere  necessities  of 
life. 

Many  workmen  claim  that  as  four  sets  of  men  tend- 
ing a  machine  for  four  hours  each,  can  now  accomplish 
a  hundred  times  as  much  work  as  the  same  number  of 


212          ECONOMICAL    USE    OF   THE   RESOURCES. 

men  working  sixteen  hours  a  day  a  hundred  years  ago., 
they  ought  to  be  able  to  secure  a  living  with  fewer 
hours  of  labor.  On  the  other  side,  it  should  be  said : 
(1)  The  saving  of  machinery  is  as  great  as  this  in 
only  a  few  employments.  On  the  farm,  for  example, 
while  much  machinery  has  been  introduced,  there  is 
much  that  must  be  done  at  which  one  can  accomplish 
little  more  than  was  effected  fifty  years  ago.  The 
amount  of  hand  labor  yet  required  is  very  large,  and 
the  average  saving  of  machinery  is  by  no  means  so- 
great  as  at  first  appears.  (2)  A  large  part  of  the- 
gain  from  machinery  is  absorbed  by  an  increased  pop- 
ulation. Without  labor-saving  machinery  the  present 
population  could  not  be  supported  with  anything  like 
the  degree  of  comfort  of  fifty  years  ago.  (3)  The 
saving  of  machinery  is  shown  in  the  better  satisfaction 
of  wants.  With  all  the  present  hardships,  the  condi- 
tion of  the  workingman,  and  of  the  entire  people,  is 
far  better  than  before.  (4)  There  has  been  an  aver- 
age shortening  of  the  hours  of  labor.  But  there  is  no 
doubt  that  the  wants  of  the  people,  where  population 
is  not  too  dense,  could  be  fairly  well  provided  for  with 
a  further  reduction  in  the  hours  of  labor,  especially  if 
our  industrial  system  was  so  perfect  that  employment 
could  always  be  found  by  all  persons  willing  to  work. 
For  the  highest  satisfaction  of  wants  laboring  men 
should  demand  that  the  hours  and  days  of  labor  be  re- 
duced, at  least  to  the  point  of  the  greatest  return ;  that 
is,  to  the  point  where  as  much  can  be  accomplished, 
year  by  year,  as  with  longer  days.  More  labor  than 
this  is  waste.  The  employer  for  a  month  or  year  may 


ECONOMICAL  USE  OF  LABOR.         213 

gain  by  it,  but  the  people,  in  the  long  run,  gain  nothing, 
and  the  laborer  has  lost  the  satisfaction  and  advantage 
which  he  might  have  had  with  shorter  days.  The  most 
important  regulation  is  that  of  one  rest-day  in  seven. 
There  <fan  be  no  doubt  that  the  average  man  will 
accomplish  more  by  working  six  days  a  week  than 
seven.  Sunday  work  is  therefore  waste  work.  To 
say  nothing  of  the  fact,  that  one  will  receive  no  more 
wages  in  the  end  for  seven  days'  work  than  for  six,  it 
is  also  true  that  he  can  not  earn  any  more.  In  a  few 
cases  where  Sunday  work  is  a  necessity,  the  workman 
should  insist  on  another  day  for  rest  at  some  time 
during  the  week.  The  Sunday  force  should  have 
Saturday  or  Monday.  One  entire  day  out  of  every 
seven  is  worth  more  for  rest  than  the  same  number  of 
hours  scattered  through  the  week.  Ten  hours  a  day 
with  a  Sunday  rest  is  better  for  any  person  than  seven 
days'  work  with  only  eight  and  a  half  hours  per  day 
for  seven  days.  The  continued  monotony  of  daily 
labor  needs  to  be  broken  up.  So,  a  week  or  two,  "  out 
of  work,"  at  some  tune  during  the  year  is  not  time  lost. 
If  the  workman  does  not  accomplish  more  during  the 
year,  he  at  least  gains  something  in  increased  advan- 
tage to  himself.  After  a  Sunday  rest  has  been  pro- 
vided for,  every  shortening  of  hours  is  an  advantage* 
(except  to  the  few  who  spend  the  leisure  time  in  dis- 
sipation), and  with  the  increased  use  of  machinery  and 
improved  social  organization,  a  very  considerable  short- 
ening of  the  labor  day  may  take  place. 


214  ECONOMICAL    USE    OF    THE    RESOURCES. 

PART  III. — THE  DIVISION  OF  LABOR. 

Adam  Smith  made  the  term  "  Division  of  Labor  " 
classical,  and,  if  the  name  is  not  the  best,  it  is  almost 
universally  understood.  It  is  the  dividing  «of  labor 
among  different  men  in  such  a  way  that  each  shall  do 
only  one  thing,  or  at  most  attend  to  a  class  of  similar 
things.  So  far  has  the  division  of  labor  been  carried 
in  factories  that  in  the  manufacture  of  mowing  and 
reaping  machines  one  man  does  nothing  but  drill  holes 
in  a  frame.  He  learns  only  the  smallest  piece  of  a 
trade,  but  becomes  very  expert.  Practice  shows  that 
the  gain  from  this  minute  division  of  labor  is  far 
greater  than  Adam  Smith  imagined,  or  than  would 
have  been  expected  from  theoretical  reasoning.  The 
secret  of  the  enormous  increase,  which  seems  to  have 
escaped  most  writers,  is  the  automatic  action  of  the 
human  body.  To  put  forth  a  conscious  effort  at  every 
movement  is  very  wearisome ;  but  after  we  have  done 
-the  same  thing  a  certain  number  of  times,  the  nervous 
organism  takes  care  of  the  necessary  movements  without 
conscious  effort.  Where  one  performs  an  act  for  the 
first  time,  he  is  compelled  to  give  mental  attention  to 
it ;  but  continued  repetition  establishes  an  automatic 
action,  by  which  the  nervous  system  continues  to  re- 
peat the  motion.  In  walking  we  do  not  think  of  the 
steps  we  are  taking.  Many  a  philosopher  strolls 
through  the  country  thinking  as  he  walks,  hardly  con- 
scious that  he  is  walking.  It  is  so  with  every  kind  of 
labor.  By  continually  doing  one  thing,  we  come  to  do 
it  automatically,  as  we  walk,  with  no  more  fatigue  than 


ECONOMICAL    USE   OF   LABOR.  215 

the  necessary  muscular  exertion.  One  may  be  able  to 
<lo  for  ten  hours  what,  if  attempted  for  the  first  time, 
would  weary  him  in  one  hour.  In  addition  to  this 
automatic  action  we  gain  all  the  skill  that  comes  from 
constant  repetition.  It  is  not  only  the  "  learning 
how  "  to  do  a  thing ;  it  is  the  doing  it  until  it  is  done 
automatically,  which  increases  one's  labor  power. 

The  actual  gain  from  the  division  of  labor  is  beyond 
what  is  easily  realized.  It  would  be  impossible  to 
satisfy  a  hundredth  part  of  the  wants  of  the  present 
day  if  each  man  were  to  do  everytting  for  himself. 
Adam  Smith's  famous  example  of  pin-making  in  his 
day,  showed  that  in  a  small  factory  ten  men,  with  in- 
different machinery,  could  majke  forty-eight  thousand 
pins  a  day,  or  four  thousand  eight  hundred  to  each 
man ;  whereas  a  man  working  independently  could  not 
make  twenty ;  that  is,  the  result  of  his  work  was  in- 
creased two  hundred  and  forty  times  by  the  division 
and  recombination  of  labor.  Pins  are  now  made  by  a 
machine  with  a  far  greater  saving  of  labor  than  in 
Adam  Smith's  day. 

The  division  of  labor  makes  machinery  possible,  and 
the  use  of  machinery  renders  a  division  of  labor  neces- 
sary. A  valuable  machine  can  not  always  be  trusted 
to  unskilled  labor;  one  must  learn  its  management, 
and  the  man  and  the  machine  go  together.  Histori- 
cally, the  division  of  labor  was  introduced  by  reason  of 
the  economy  of  one  man's  devoting  his  time  to  a  par- 
ticular trade;  but  it  has  been  carried  to  its  present 
minute  subdivisions  by  the  introduction  of  machinery, 
and  the  setting  of  one  man  to  tending  a  machine. 


216  ECONOMICAL    USE    OF   THE    RESOURCES. 

The  division  of  labor  has  been  as  productive  of  in- 
creased results  in  the  highest  employments  as  in  the 
more  simple  operations,  and  as  much  gain  has  beeni 
made  in  the  division  of  mental  labor  as  in  muscular. 
No  man  now  expects  to  learn  everything.  He  who 
hopes  to  add  to  the  sum  of  human  knowledge  must 
have  his  specialty.  One  man  gives  his  entire  attention 
to  chemistry ;  another,  to  some  department  of  natural 
history.  By  devoting  so  much  time  to  a  narrow  field, 
one  becomes  very  proficient.  His  work,  if  well  done, 
may  not  need  to  be  done  over  again,  or  may  be  re- 
viewed with  comparatively  little  effort.  In  economic 
science,  he  who  would  add  anything  to  that  already 
known  must  not  only  know  what  has  been  done,  but 
must  give  a  great  deal  of  time  to  original  investigation. 
The  number  of  men  now  devoting  their  lives  to  special- 
ties is  very  large,  and  it  is  because  of  the  division  of 
the  field  of  knowledge  into  so  many  parts  that  the  ex- 
ploration is  proceeding  so  rapidly.  It  should  also  b& 
noticed  that  one  person  may  spend  many  years  in  pre- 
paring to  investigate  a  specialty,  and  so  make  himself 
a  very  competent  investigator.  If  he  were  to  attempt 
the  whole  field  of  knowledge,  he  could  make  no  such 
preparation. 

An  extended  division  of  labor  is  not  practical  except 
where  there  is  a  considerable  number  of  people.  It 
does  not  require  a  very  large  community  to  need  the 
service  of  a  shoemaker,  but  when  we  come  to  a  factory 
which  employs  at  least  a  hundred  men  in  the  manu- 
facture of  a  particular  kind  of  shoe,  it  is  evident  that' 
there  must  be  a  large  population  to  keep  these  hun- 


ECONOMICAL    USE    OF    LABOR.  21 T 

tired  men  at  work.  So,  a  large  population  is  re- 
quired to  support  the  business  of  piano-making.  Theo- 
retically, it  might  seem  that  a  population  of  a  few 
thousand  people  would  afford  opportunity  for  a  very 
great  division  of  labor ;  but,  practically,  the  division 
of  labor  to  its  present  extent  is  impossible  except  with 
a  population  of  a  great  many  thousand  people.  It  i& 
not  necessary  that  these  people  all  reside  in  the  same 
city,  or  even  in  the  same  nation. 

How  FAR  SHOULD  THE  DIVISION  OF  LABOR  BE 
CARRIED  ? — The  only  question  concerning  the  division 
of  labor  at  present  is  the  extent  to  which  it  should  be* 
carried,  and  here  we  have  to  take  into  account  the- 
wants  and  welfare  of  the  laborers  as  well  as  their  in- 
crease in  labor  power ;  for  we  shall  make  a  mistake 
wherever  we  lose  sight  of  the  fact  that  the  laborers 
embody  in  themselves  both  labor  power  and  the  wants 
we  have  to  satisfy.  One  of  these  wants,  as  we  have 
seen  before,  is  leisure.  Another,  is  individual  devel- 
opment, both  physical  and  mental;  and  another  is 
agreeableness  of  the  labor  performed. 

The  division  of  labor  must  be  supplemented  by  a 
combination  of  the  scattered  parts  of  the  work.  Each 
man  must  be  matched  against  others  of  a  set.  If  one 
man  is  to  spend  his  entire  time  in  drilling  holes  in  a 
frame,  there  must  be  many  others  engaged  in  making 
the  frame.  If  a  thousand  men  are  at  work  in  this 
machine  shop,  there  must  be  hundreds  of  thousands  at 
other  employments.  The  difficulty  in  this  division  and 
recombination  of  labor  is  to  keep  just  the  right  num- 
ber of  men  at  each  part  all  of  the  time.  If  one  class- 


218          ECONOMICAL    USE   OF   THE   RESOURCES. 

of  workmen  strike,  they  stop  the  set  with  which  they 
are  connected.  If  too  many  people  are  engaged  in 
one  employment,  there  is  soon  an  overproduction  in 
that  particular  line.  More  shoes  are  made  than  can 
be  worn,  and  enforced  idleness  is  the  result.  The  en- 
forced idleness  of  one  set  of  laborers  reduces  their  in- 
come and  power  to  purchase  the  productions  of  other 
sets,  and  throws  some  of  them  out  of  employment. 
Eventually  things  will  adjust  themselves  by  a  change 
of  employment  on  the  part  of  a  portion  of  the  laborers, 
but  this  adjustment  com.es  only  after  a  panic  and  hard 
times.  Thus,  where  each  man  does  only  a  very  simple 
thing,  and  has  not  learned  the  other  parts  of  his  trade, 
the  adjustments  must  be  very  close.  Then  there  are 
likely  to  be  too  many  men  of  one  class  in  proportion 
to  those  of  others,  and  some  of  these  must  be  idle. 
Where  each  man  understands  an  entire  trade,  instead 
of  a  part  of  the  trade,  he  may  do  any  portion  of  it  for 
which  laborers  are  needed.  He  may  take  the  place  of 
those  who  fail,  or  go  where  there  is  the  greatest  need. 
If  a  young  man  learns  only  a  part  of  the  trade,  in 
later  life  he  is  liable  to  be  thrown  out  of  work  through 
changes  in  the  methods  of  production,  or  through  the 
excess  of  laborers  in  his  department ;  and  it  is  not 
easy  for  him  to  pick  up  the  other  parts  of  the  trade. 
Where  one  has  learned  to  do  a  considerable  variety  of 
things  in  his  youth,  and  mastered  at  least  the  whole  of 
one  trade,  he  is  able  to  continue  at  work  in  places 
where  the  division  of  labor  is  not  carried  very  far  ;  and 
in  large  factories  he  can  fill  any  one  of  several  places, 
thus  insuring  constant  employment  for  himself.  The 


ECONOMICAL    USE    OF   LABOR.  219 

extreme  division  of  labor  tends,  therefore,  to  throw 
large  numbers  of  laborers  out  of  employment  when- 
ever anything  unusual  occurs  in  the  methods  of  pro- 
duction. It  is  a  question  whether  the  division  of  labor 
at  the  present  day,  considering  the  loss  from  necessary 
idleness,  is  not  carried  farther  than  is  profitable,  even 
when  we  take  into  account  only  the  results  accom- 
plished. Nevertheless,  the  enormous  gain  from  a 
division  and  recombination  of  labor  is  so  great  that 
it  is  likely  to  be  still  further  extended ;  and  we  need 
better  means  for  distributing  the  laborers  among  dif- 
ferent trades,  so  that  fewer  will  be  out  of  employment. 

TENDS  TO  BELITTLE  THE  LABORER. — It  is  evident 
that  an  extreme  division  of  labor  tends  to  belittle  the 
laborer.  The  man  who  does  one  simple  thing  day  af- 
ter day,  which  he  comes  to  do  automatically,  will  not 
develop  himself  as  did  the  traditional  Yankee,  who 
could  do  anything.  The  fact  that  one  is  able  to  do  a 
considerable  variety  of  things,  and  does  do  very  many 
things  in  the  course  of  a  year,  tends  to  make  him  alert, 
to  increase  his  inventive  power,  and  is  undoubtedly  one 
of  the  causes  of  the  unusual  skill  of  American  work- 
men. When  we  take  the  welfare  of  the  laborer  into 
account,  we  can  not  afford  to  have  men  reduced  to 
mere  machines.  The  scope  of  their  work  must  be 
broad  enough  to  give  them  the  skill  and  general  ability 
of  the  traditional  American  mechanic. 

The  injury  to  the  laborer  by  the  excessive  division 
of  labor  may  be  partly  overcome  by  working  fewer 
hours  in  the  day.  His  development  then  depends  upon 
how  he  spends  his  leisure  time.  It  may  be  wasted,  or 


220          ECONOMICAL    USE    OF   THE   RESOURCES. 

may  be  used  in  study  which  will  make  him  more  of 
a  man  than  would  even  a  great  variety  of  work.  But, 
for  the  average  workman,  nothing  will  more  conduce  to 
the  development  of  his  powers  than  a  variety  of  work, 
or  a  range  of  work  wide  enough  to  occupy  his  mind 
and  develop  his.  inventive  genius.  We  could  well  af- 
ford to  sacrifice  something  in  the  amount  of  labor 
which  can  be  accomplished,  for  the  sake  of  the  charac- 
ter of  the  laborer. 

It  should  also  be  noticed  that  the  gain  from  the  di- 
vision of  labor  decreases  very  rapidly  the  farther  it  is 
carried.  There  is  enormous  gain  in  dividing  the  work 
of  the  world  into  different  trades ;  and,  frequently,  in 
a  very  much  more  extended  subdivision.  But  after  the 
division  of  labor  has  been  carried  as  far  as  is  for  the 
advantage  of  the  laborer,  the  subsequent  gain  from 
more  minute  divisions  is  very  much  less.  We  might 
almost  say  that  the  advantage  from  the  extension  of 
the  division  of  labor  decreases  in  geometrical  progres- 
sion. And  the  philanthropist  will  never  desire  to  see 
it  carried  farther  than  is  for  the  benefit  of  the  work- 
man. 

Closely  connected  with  the  division  of  labor  is  the 
advantage  of  each  man  doing  what  he  can  do  best. 
This  is  not  the  same  thing  as  the  division  of  labor. 
There  would  be  great  gain  from  the  latter  if  we 
deliberately  put  each  man  to  doing  what  he  is  least 
fitted  for.  A  few  years'  practice  at  the  work  at  which 
he  was  set  would  make  him  far  more  efficient  than 
the  best  natural  untrained  hand.  Nevertheless,  much 
more  would  be  accomplished  by  apportioning  the  work 


ECONOMICAL    USE    OF    LABOR.  221 

•with  regard  to  natural  ability.  It  is  true  there  may 
not  be  work  enough  of  a  certain  kind  for  all  the  men 
who  are  better  fitted  for  it  than  for  anything  else,  but 
the  poorest  must  take  something  for  which  he  is  not 
so  well  fitted,  though  there  is  always  a  second  and 
third  choice. 

PART  IV.     THE  DEVELOPMENT  OF   LABOR  POWER 

AND  THE  PROHIBITION  OF  CERTAIN 

FORMS  OF  LABOR. 

Labor  power,  unlike  Natural  Kesources,  does  not  live 
forever ;  but  is  developed  and  dies  with  each  genera- 
tion. The  education  and  training  of  men  has  refer- 
ence both  to  their  power  to  do  something,  and  also  to 
their  character  and  personal  well-being;  but,  con- 
sidered only  with  reference  to  their  power  of  labor, 
their  education  and  training  are  of  the  utmost  impor- 
tance. More  will  be  accomplished  in  a  generation  by 
devoting  the  first  twenty  years  of  the  child's  life  to 
education.  This  education  might  include  the  learning 
a  trade.  A  little  development  of  skill  may  double  the 
laborer's  power  for  forty  years.  A  slight  increase  in 
intelligence  may  make  the  laborer  ten  times  more  ef- 
fective. It  is  undoubtedly  for  the  interest  of  society 
that  the  early  years  of  life  be  given  to  preparing  for 
labor  thereafter.  Child  labor,  aside  from  that  in  the 
Jiome,  is  particularly  wasteful.  It  is  unfortunate  that 
Si  child  under  twenty  years  of  age  should  be  compelled 
to  support  his  parents.  Society  can  not  afford  to  have 
the  youth  of  the  rising  generation  wasted  in  this  way. 


222          ECONOMICAL   USE   OF   THE   RESOURCES. 

The  labor  of  children  to  a  moderate  extent  on  a 
farm  or  at  home  is  often  the  best  part  of  an  education. 
So,  also,  the  learning  of  a  good  trade  by  a  boy  who- 
can  not  go  to  school,  is  the  next  best  thing  to  school 
training ;  assuming,  in  both  cases,  that  labor  is  not 
carried  to  excess.  But  child  labor  in  factories,  and  in 
many  other  conditions,  is  a  different  matter.  Seldom 
is  any  trade  learned ;  the  child  is  deprived  of  school 
education ;  and  there  is  the  danger  of  permanent  phy- 
sical injury.  When  we  come  to  child  labor  in  mines, 
and  under  circumstances  which  work  physical  injury, 
it  is  not  only  abominable,  but  economically  unprofitable. 
That  is,  the  child  will  accomplish  less  during  his  life- 
time than  if  he  had  not  been  injured  in  childhood. 
The  reports  of  the  labor  of  children  in  the  sulphur 
mines  of  Sicily,  show  a  complete  ruin  of  the  child  be- 
fore he  comes  to  manhood.  The  labor  of  children  in 
English  coal  mines  a  century  ago  was  not  much  better. 
The  breaking  down  of  the  physical  constitution  of  the 
child  not  only  affects  his  own  life,  but  that  of  future 
generations.  This  much,  so  far  as  the  mere  amount  of 
work  accomplished  is  concerned.  When  we  take  the 
wants  of  the  child  into  consideration,  the  case  is  far 
stronger.  The  welfare  of  the  child  for  his  entire  life 
depends  largely  on  his  childhood. 

All  uiihealthful  conditions  of  labor,  such  as  badly 
ventilated  factories,  not  only  decrease  the  power  of  the 
laborer,  and  reduce  the  amount  of  labor  he  will  be 
able  to  perform  thereafter,  but  also  detract  from  the 
satisfaction  of  his  own  wants.  Life  is  much  harder 
for  him  on  this  account,  and  his  satisfactions  are  fewer. 


ECONOMICAL    USE   OF   LABOR.  223 

More  attention  will  doubtless  be  given  in  the  future  to 
the  healthful  conditions  of  the  laborer,  and  to  agreea- 
ble surroundings  during  the  hours  of  labor. 

PROHIBITION  OF  CERTAIN  FORMS  OF  LABOR. — 
1.  Prohibition  of  child  labor  in  mines  and  factories. 
In  all  that  is  said  about  the  right  of  a  man  to  control 
himself,  we  understand  one  who  has  reached  the  .ordi- 
nary age  of  judgment.  A  child  is  not  a  man,  and  does 
not  know  what  he  himself  will  want  as  he  grows 
older.  Society  is  the  natural  protector  of  all  children. 
They  are  to  become  men,  to  be  voters,  and  their  in- 
fluence on  other  people  will  be  felt  all  their  lives.  So- 
ciety has  an  interest  in  their  labor  power,  and  can  not 
afford  to  have  a  child  ruined  before  he  becomes  of  age. 
There  is  seldom  any  necessity  for  State  interference 
with  child  labor  at  home.  The  boy  on  a  farm  is  in 
the  open  air,  and  works  under  conditions  which  have 
given  us  some  of  the  ablest  men  in  the  nation.  But 
when  the  child  is  compelled  to  work  for  others  than 
his  parents,  or  to  work  under  the  conditions  of  factory 
life,  it  is  time  for  the  State  to  interfere.  A  child  in, 
a  town  where  there  is  a  factory  ought  to.  be  in  school. 
A  farm  boy  should  be  in  school  also,  but  the  loss  i& 
not  so  great  when  he  gets  the  Yankee  education  that, 
comes  from  farm  life.  The  labor  of  children  under- 
fourteen  in  mines  and  factories  should  be  absolutely 
prohibited.  For  a  few  years  after  that  period,  it; 
should  be  tolerated  only  under  certain  conditions,  such 
as  a  half -day  in  school,  or  the  learning  of  a  trade, 
and  even  then  the  State  should  see  that  the  conditions 
are  healthful,  both  physically  and  morally. 
15 


224  ECONOMICAL    USE    OF    THE    RESOURCES. 

2.  The  prohibition  of  the  labor  of  women  in  cer- 
tain employments.     The  welfare  of  woman  is  so  im- 
portant  to   Society  that  her  degradation  can    not  be 
permitted.     She  must  not   be  allowed  to  work  in  coal 
mines,  as  in  England  years  ago,  or  at  certain  other 
kinds  of  labor ; .  and,  if  in  a  factory,  the  State  should 
require  the  conditions  to  be  healthful. 

3.  The  prohibition  of  the  labor  of  men  under  cer- 
tain conditions.     Men  can  be  found  who  will  destroy 
their  health  for  wages.     Society  can  not  afford  to  have 
its  labor  power  broken  down  unnecessarily,  nor  to  have 
the  population  deteriorate.     Hence  every  factory  should 
be  inspected,  and  the  conditions  of  life  therein  be  made 
as  healthful  as  the  nature  of  the  employment  will  al- 
low. 


CHAPTER  II. 

ECONOMICAL  USE  OF  THE  RESOURCES  OF  NATURE. 

The  Resources  of  Nature,  it  will  be  remembered, 
are  either  permanent  or  consumable.  The  first  in- 
cludes land,  the  atmosphere,  water,  etc.,  and  is  by  far 
the  larger  and  more  important  portion.  The  second 
consists  of  coal  and  other  materials,  the  natural  fertility 
of  the  soil,  timber,  wild  animals,  fish,  etc.  The  eco- 
nomic requirements  for  the  use  of  the  two  classes  differ 
because  the  one  is  not  destroyed  in  the  using,  but  con- 
tinues from  age  to  age ;  while  the  other  class  is  con- 
sumed as  used.  Some  of  the  Consumable  Natural 
Wealth  will  be  replaced  in  time  by  Nature,  and  other 
portions  can  be  replaced  by  man,  while  still  other 
Tarieties,  when  once  used,  are  destroyed  forever. 

PART  I. — PERMANENT  NATURAL  RESOURCES. 

The  Best  First. — It  is  economy  to  use  the  best  of 
the  Permanent  Natural  Resources  first,  and  hold  the 
rest  in  reserve.  The  best  satisfy  more  wants  with  less 
labor  than  the  poorer,  and  as  they  are  not  destroyed 
in  the  using  nothing  is  lost.  The  very  best  may  give 
a  few  people  a  fair  living  almost  without  work ;  while 
from  the  poorest  it  would  be  impossible  to  obtain  the 
most  meager  subsistence  for  the  laborers.  It  is  very 
unfortunate  for  any  nation  to  be  compelled  to  use 
the  poorest  of  its  Natural  Resources,  and  perhaps  no 

(225) 


226  ECONOMICAL    USE    OF    THE    RESOURCES. 

nation  has  ever  brought  into  use  every  known  Re- 
source  of  Nature  in  order  to  support  its  people ;  there 
is  always  a  poorer  reserve  out  of  which  intense  labor 
might  still  wring  a  scanty  return,  though  not  enough 
to  support  itself. 

As  population  crowds  a  country,  it  is  often  neces- 
sary to  bring  into  use  the  inferior  Resources  of  Nature 
by  which  wants  are  much  more  poorly  satisfied.  The 
owner  of  a  good  farm  can  provide  a  much  better  liv- 
ing for  his  family  than  the-  owner  of  inferior  land.  A 
city  located  on  a  good  harbor  has  the  advantage  over 
one  on  a  poor  harbor,  or  one  with  no  harbor  at  all. 
The  people  with  pure  air  and  pure  water  have  a  great 
advantage  over  those  breathing  the  miasma  of  a 
swamp,  and  using  water  that  is  polluted  by  vegetable 
decay  or  otherwise.  So,  the  people  with  abundance  of 
room  have  an  advantage  over  those  who  must  breathe 
the  air  of  the  crowded  tenement  districts.  It  is  an 
advantage  to  use  the  best  air  and  the  best  water.  The 
best  Resources  of  Nature  are  not  always  used  first, 
because  they  are  not  always  the  easiest  to  get  at  in  the 
beginning.  The  early  immigrants  to  New  England 
came  upon  the  rocky  and  poor  land.  The  Western 
prairies  were  reached  later,  with  great  difficulty.  We 
hear  a  great  deal  of  late  about  the  abandoned  farms  of 
New  England — abandoned  because  there  is  better  land 
for  agricultural  purposes  in  the  West,  and  we  are  com- 
ing to  use  the  best  Resources  of  Nature.  With  the 
dense  population  of  the  Eastern  cities,  these  abandoned 
farms  are  often  much  more  desirable  for  summer  resi- 
dences than  the  crowded  city  or  the  Western  prairie  ; 


ECONOMICAL  USE  OF  NATURAL  WEALTH.    227 

and  hence  are  being  rapidly  changed  from  agricultural 
to  residence  land.  For  residence  land  they  are  the 
best,  and  follow  the  law  enunciated. 

This  economic  requirement  is  violated  by  land  spec- 
ulators in  new  countries,  who  often  hold  the  best  land 
out  of  the  market  for  a  higher  price ;  also,  in  cities 
where  private  owners  hold  the  land  best  fitted  for 
building  purposes  out  of  the  market  for  an  increase  in 
value.  Enterprising  builders  are  compelled  to  go  be- 
yond them,  to  travel  a  greater  distance  or  to  use  less 
desirable  building-sites,  while  the  use  of  these  best  loca- 
tions is  lost  for  many  years.  Indeed,  one  of  the  strong- 
est arguments  which  those  who  favor  the  nationaliza- 
tion of  land  make,  is  the  claim  that  the  best  land 
and  the  best  locations  would  be  used  first,  and  only  the 
poorer,  and  the  more  distant,  brought  into  use  as  re- 
quired. The  proper  way  to  build  a  city  is,  beginning 
at  a  center,  to  extend  business  blocks,  continually  ; 
and  residences  one  after  the  other  as  closely  as  the 
sizes  of  lots  makes  desirable.  There  should  be  no 
vacant  blocks  or  spaces,  and  no  unnecessary  distance 
to  travel.  So  in  the  settlement  of  a  new  country,  it 
is  not  best  to  run  over  the  whole  land  at  first,  and  to 
open  a  new  farm  miles  distant  from  other  habitations. 
When  the  new  farm  is  needed,  the  land  adjoining  one 
already  cultivated  should  be  taken,  and  so  the  farms  on 
the  prairie  should  extend  toward  the  west,  one  joining 
the  other  with  no  uncultivated  space  between.  This 
would  give  the  advantage  of  compact  society  and  of  a 
sufficiently  dense  population.  When  we  say  the  best 
land,  we  do  not  always  mean  that  which  will  produce 


228          ECONOMICAL    USE    OF   THE   RESOURCES. 

the  largest  crops ;  but  that  which,  all  things  consid- 
ered, is  best  fitted  to  satisfy  wants.  The  location  of 
the  land  may  be  more  important,  even  for  agricultu- 
ral purposes,  than  its  quality.  In  cities  the  location 
is  everything. 

It  would  undoubtedly  be  proper  for  the  government 
to  require  that  all  land  be  brought  into  use  as  fast  as 
needed,  notwithstanding  private  ownership.  Should 
the  owner  be  unwilling,  or  unable,  to  use  it  for  the 
best  interests  of  society,  it  might  be  proper  to  order 
that  it  be  condemned  and  sold  at  a  fair  price  to  one 
who  would  so  use  it.  Land  in  cities,  very  necessary 
for  building  sites,  has  long  been  held  out  of  the  mar- 
ket through  the  action  of  the  law  in  regard  to  minor 
or  insane  heirs.  Because  no  title  could  be  given  to 
those  who  would  use  it  for  the  interests  of  Society,  it 
has  been  covered  with  unsightly  buildings  and  used  for 
immoral  purposes.  Some  provision  for  the  use  of  all 
such  Natural  Wealth  should  be  made.  The  first  rule 
in  regard  to  Natural  Wealth  is  to  use  the  best  of  it 
first,  and  to  leave  the  poorest  as  a  reserve. 

It  is  not  always  possible  to  use  the  best  Resources 
of  Nature  first,  because  more  time  is  required  to  put 
them  in  condition  for  use  than  the  people  at  the  begin- 
ning are  able  to  bestow. 

Many  of  the  Natural  Resources,  especially  the  forces 
of  nature,  are  discovered  late  in  the  world's  history. 
They  were  not  used  earlier  because  not  known,  but  as 
soon  as  discovered  they  add  greatly  to  the  satisfaction 
of  wants.  What  was  the  best,  years  ago,  may  become 
the  poorest  through  the  discovery  of  something  better. 


ECONOMICAL  USE  OF  NATURAL  WEALTH.    229 

For  years  men  were  largely  dependent  on  the  force  of 
the  wind  to  sail  their  ships.  With  the  discovery  of 
the  method  of  using  steam,  and  of  the  beds  of  coal  to 
produce  it,  it  is  found  more  economical  to  use  coal  and 
steam  to  some  extent  than  to  depend  entirely  on  wind 
and  sails.  We  have  recently  discovered  practical 
methods  of  separating  the  metal  aluminum  from  the 
clay  combinations  which  hold  it.  How  much  man 
gained  when  he  found  that  he  could  melt  a  red  ore, 
and  produce  an  iron  which  could  be  hammered  into 
shape !  Stone  then  became  useless  for  cutting  pur- 
poses. More  recently  we  have  discovered  the  reser- 
voirs of  petroleum  beneath  the  surface  of  the  earth, 
and  the  rock  gas  which,  so  long  as  it  may  last,  takes 
the  place  of  coal.  The  rich  swamps  may  be  brought 
into  use  late  in  a  country's  settlement.  This  may 
sometimes  happen  through  ignorance  of  their  utility 
when  drained ;  but  more  often  because  the  new  settler 
has  not  time  to  drain  them,  or  to  wait  for  the  sour  land 
to  be  sweetened  by  the  sunlight  and  air.  It  is  econ- 
omy to  use  the  best  of  Nature's  Eesources  first,  but 
time,  frequently  more  than  a  year,  is  required  before 
results  are  secured.  The  new  settler,  even  if  he  knows 
the  utility  of  the  swamp,  has  not  a  great  store  of  Pro- 
duced Wealth  on  hand,  perhaps  but  little  machinery, 
and  he  must  live.  If  he  is  poor,  he  is  quite  likely  to 
take  the  land  he  can  work  the  easiest,  and  get  results 
from  quickest,  even  though  they  be  small.  After  he 
has  accumulated  a  supply  of  food  for  a  year,  provided 
some  machinery,  and  can  spare  some  labor  from  the 
present  needs  of  his  family,  he  will  drain  the  swamp, 


230  ECONOMICAL    USE    OF   THE   RESOURCES. 

adding  Produced  Wealth  to  Natural  Wealth — drains 
to  the  swamp — and  may  find  the  latter  so  much  better 
that  he  will  abandon  the  poorest  of  his  old  land. 

Use  to  the  Point  of  Diminishing  Returns,  but  Not 
Beyond.  —  Natural  Eesources  should  be  used  to  the 
point  of  diminishing  returns,  and  not  too  far  beyond. 
The  meaning  of  the  phrase,  "  diminishing  returns," 
was  explained  in  Book  II.,  but  unless  the  reader  has 
a  very  clear  conception  of  it,  it  would  be  well  to  turn 
back  and  re-read  what  is  there  said,  for  this  is  one 
of  the  most  important  principles  in  Political  Economy. 
By  diminishing  returns  we  mean  the  returns  to  a  given 
amount  of  labor  employed  on  land.  It  pays  to  work  a 
farm  well.  The  good  farmer  gets  a  larger  return  for 
€ach  day's  work  than  the  poor  farmer.  The  poor 
farmer  can  frequently  double  the  labor  expended  upon 
his  land  and  more  than  double  the  crop,  but  there  is  a 
limit  to  such  increase.  After  a  certain  amount  of  la- 
bor has  been  expended  upon  land,  additional  work  will 
produce  better  crops,  but  not  better  in  proportion  to 
the  labor  bestowed.  If  ten  days'  labor  produces 
twenty  bushels  of  wheat,  an  additional  ten  days'  labor 
will  produce  only  ten  bushels,  and  consequently  the  re- 
turns to  labor  have  diminished.  In  the  first  instance 
we  have  two  bushels  of  wheat  for  each  day's  work,  in 
the  second  only  one  and  a  half.  It  is  very  important 
that  land  be  worked  to  the  point  of  diminishing  re- 
turns ;  because  it  pays  better  than  when  the  cultivation 
is  poorer,  and  because  it  gives  opportunity  for  a  more 
dense  population,  and  the  advantages  of  society.  It  is 
clearly  unfortunate  to  be  compelled  to  work  land  be- 


ECONOMICAL    USE    OF   NATURAL    WEALTH.        231 

yond  the  point  of  diminishing  returns,  because  the 
reward  of  labor  is  so  much  less.  A  dense  population 
in  an  agricultural  country  is  compelled  to  work  land 
far  beyond  this  point,  unless  food  is  imported  from 
abroad. 

Something  analogous  to  this  occurs  in  the  erection  of 
a  building.  There  is  economy  in  building  a  business 
block  of  several  stories  ;  but  a  height  is  soon  reached 
where  every  additional  story  costs  more  in  proportion, 
•either  in  the  cost  of  building  or  in  the  cutting  off  of 
light  and  air  from  other  buildings.  Tall  buildings  are 
erected  only  because  of  the  great  value  of  the  land  on 
which  they  stand.  If  an  adjoining  lot  could  be  had 
for  nothing,  the  buildings  would  be  lower.  It  is  an 
advantage  to  have  population  dense  enough  to  require 
buildings  of  as  great  height  as  can  be  economically 
erected,  but  when  we  go  beyond  this,  the  cost  of  room 
is  increased. 

PAST  II. — THE  USE  OF  THE  CONSUMABLE  KESOURCES 
OF  NATURE. 

1.  These  should  be  used  without  waste,  since  they 
are  destroyed  in  the  using,  and  are  limited  in  quantity. 
Of  the  minerals,  such  as  coal  and  iron,  it  is  certain 
that  there  is  enough  for  the  next  hundred  years,  but  a 
hundred  years  is  a  very  short  period  in  the  world's  his- 
tory ;  the  coal  was  produced  by  the  growth  of  forests 
for  thousands  of  years ;  and  the  interests  of  the  people 
five  hundred  years  hence  should  be  considered  as  well 
as  our  own.  To  be  sure,  some  substitute  for  coal  may 


232          ECONOMICAL    USE   OF   THE   RESOURCES. 

be  discovered,  but  no  one  knows  that  it  will  be  discov- 
ered. The  only  certain  method  for  the  production  of 
a  substitute  which  we  could  now  put  in  practice  is  the 
devoting  of  large  tracts  of  land  to  forests,  and  by  the 
slow  growth  of  timber  supply  fuel  for  heat  and  power. 
All  this  is  no  reason  for  suffering  the  coal  to  remain 
unused — our  interests  are  just  as  important  as  those 
of  the  people  who  shall  come  after  us — but  it  is  a  rea- 
son for  insisting  that  all  such  Resources  of  Nature 
should  be  used  without  waste,  and  the  prevention  of 
waste  should  be  enforced  by  government  authority. 

Timber.  —  There  is  another  class  of  Consumable 
Natural  Resources  which  can  be  replaced  by  human  ef- 
fort, and  some  of  which  nature  will  replace  unaided. 
Of  these  are  timber,  wild  animals  and  fish.  Timber 
can  be  grown,  but  it  requires  the  use  of  land  for  many 
years.  The  time  will  perhaps  come  in  the  United 
States  when  we  shall  grow  timber  as  a  regular  cropy 
as  we  now  do  wheat ;  but  the  great  expense  connected 
with  such  production  is  a  reason  for  insisting  on  the 
protection  of  our  present  timber  lands.  For  the  effect 
on  climate,  the  forests  should  doubtless  be  maintained 
in  many  mountain  regions ;  and  if  these  lands  of  little 
value  for  agriculture  were  kept  in  the  possession  of  the 
government  and  protected  from  depredations,  timber 
could  be  sold  from  them  each  year.  The  question  of 
forestry  has  received  more  attention  in  Europe  than  in 
the  United  States.  It  will  be  fortunate  for  us  if  we 
refuse  to  sell  the  land  still  in  the  national  possession 
which  is  suitable  for  public  parks  and  forests.  The 
forests  will  be  a  protection  for  river  sources,  and 


ECONOMICAL  USE  OF  NATURAL  WEALTH.    233 

exert  a  favorable  influence  on  climate.  Once  sold  for 
a  pittance,  the  national  possession  of  this  land  can  not 
be  regained  except  at  more  than  ten  times  the  price. 
Steps  should  also  be  immediately  taken  to  regain  pos- 
session of  land  which  ought  never  to  have  been  sold. 

Fish. — Fish,  as  one  of  the  Resources  of  Nature,  are 
a  very  important  food  supply,  both  for  the  savage  and 
the  civilized  man.  When  the  catch  is  not  too  great, 
the  supply  is  maintained  without  human  effort  or  su- 
pervision ;  but  as  population  increases  it  is  very  easy 
to  diminish,  and  perhaps  exterminate,  some  of  the 
most  desirable  varieties.  Hence,  supervision  of  the 
fishing  interests  is  a  very  proper  part  of  the  work  of 
any  government.  Although  all  fishermen  may  know 
that  reckless  fishing  is  ruinous  in  the  end,  even  to 
their  own  interests,  the  quantity  which  any  one  fisher- 
man may  take  can  not  be  large  enough  to  make  any 
perceptible  difference,  and  his  course  will  have  no  in- 
fluence on  that  of  others.  The  fisherman  whose  oper- 
ations will  be  limited  by  the  law  may,  therefore,  be 
perfectly  satisfied  with  the  law  which  compels  others 
as  well  as  himself  to  observe  certain  rules.  The  Unit- 
ed States  Fish  Commission  is  now  exercising  a  very 
general  supervision  over  this  class  of  Natural  Wealth; 
and  is  studying  the  habits  of  the  fishes  with  a  view  of 
making  this  resource  of  more  use  to  the  people.  New 
waters  are  stocked  with  new  varieties,  and  protection 
given  to  the  finny  tribes  where  they  are  in  danger  of 
extermination.  Excellent  State  laws  have  also  been 
enacted,  and  the  future  of  this  form  of  Natural 
Wealth  is  very  hopeful.  Like  all  the  Resources  of 


234  ECONOMICAL    USE    OF   THE   RESOURCES. 

Nature,  fish  are,  of  right,  the  property  of  the  whole 
people ;  and,  fortunately,  the  difficulty  of  fencing 
them  in  has  made  their  appropriation  by  private  par- 
ties difficult.  Such  appropriation  has  been  attempted, 
and  to  some  extent  carried  out.  The  public  owner- 
ship of  all  the  fish  in  our  waters  is  the  ground  of  the 
right  and  duty  of  the  governments,  both  State  and 
national,  to  encourage  fish  production,  and  to  regulate 
the  manner  in  which  fish  shall  be  taken. 

Any  reader  will  understand  that  where  fishing  is 
free,  competition  will  reduce  the  selling  price  to  the 
cost  of  taking,  so  that  the  people  really  get  their  own" 
fish  for  nothing,  paying  only  the  competitive  price  of 
catching  and  handling  by  wholesale  and  retail  dealers. 

PART  III. — PUBLIC  AND  PRIVATE  USE  OF  THE  RE- 
SOURCES OF  NATURE. 

The  greater  part  of  land  is  now  held  as  private 
property,  and  its  use  controlled  by  him  who  has  the 
title  in*  fee.  If  all  land  were  still  in  the  hands  of  the 
government,  the  first  question  would  be  whether  it 
should  work  the  land  on  public  account  or  lease  it  to 
private  parties.  To  work  all  land  on  government  ac- 
count would  mean  Socialism,  since  it  would  necessitate 
State  ownership  of  most  other  instruments  of  produc- 
tion. The  State  would  be  compelled  to  improve  the 
land,  build  houses  for  its  employes  upon  it,  own  teams 
and  farming  implements,  and  erect  the  buildings  in 
cities.  The  objections  already  urged  against  Socialism 
condemn  this  plan.  The  fact  that  Society  owns  the 


ECONOMICAL    USE    OF   NATURAL    WEALTH.        235 

Resources  of  Nature  no  more  implies  that  government 
should  work  them  on  public  account  than  the  owner- 
ship of  English  acres,  or  an  Irish  estate,  implies  that 
the  proprietor  works  the  land  with  his  own  hands.  As 
a  matter  of  fact,  he  rents  it.  A  government  can  lease 
land  as  easily  as  an  Irish  landlord.  Neither  is  there 
any  difficulty  in  giving  the  occupant  permanent  posses- 
sion, so  that  he  may  be  sure  of  living  in  the  house  he 
builds,  and  leaving  it  to  his  children  after  him. 

The  natural,  indeed  the  only,  course  for  the  govern- 
ment to  pursue,  if  it  retains  possession  of  its  land  as 
a  trustee  for  the  people,  is  to  give  a  perpetual  lease  at 
a  variable  rent — rent  which  shall  be  increased  or 
diminished,  annually,  as  the  value  of  the  land  changes. 

In  any  case,  therefore,  we  may  expect  the  great 
bulk  of  the  Natural  Resources  to  be  used  by  private 
parties,  and  not  by  the  State.  Under  the  private 
ownership  of  land,  as  it  exists  among  us,  this  is  the 
case;  and  with  recognition  of  State  ownership,  the 
land  would  still  be  leased  to  private  parties  who  would 
use  it  in  individual  enterprise  precisely  as  at  present. 
All  the  instruments  of  production  would,  of  course,  be 
in  the  hands  of  private  persons.  Private  parties  would 
make  the  improvements,  erect  the  buildings,  and  con- 
trol  all  the  machinery  for  carrying  on  production. 
Society  would  go  on  as  at  present,  with  the  exception 
that  the  rent  of  the  Resources  of  Nature  would  be 
paid  to  the  government  as  trustee  for  the  people. 

Neither  ownership  of  land  in  fee,  nor  a  perpetual 
lease  to  private  persons  at  a  variable  rent,  should  pre- 
vent the  general  control  of  the  Resources  of  Nature 


236  ECONOMICAL    USE    OF   THE   RESOURCES. 

by  Society.  Usually  he  who  has  possession  of  the  land 
may  be  trusted  to  make  the  best  use  of  it,  or  at  least 
some  use  which  will  be  for  the  interests  of  Society.  If 
he  cultivate  it,  he  provides  food  for  the  multitude ;  if 
he  covers  it  with  buildings,  these  are  for  rent  to  the 
people,  or  for  use  in  the  production  of  goods.  But 
there  are  some  exceptions.  Where  land  is  scarce  the 
people  may  very  properly  forbid  the  fencing  in  of  a 
large  portion  of  it  for  a  private  park,  even  by  the 
owner.  If  it  is  a  public  park,  all  can  enjoy  it ;  but 
land  for  a  private  park  is  withdrawn  from  public  use 
for  the  gratification  of  a  very  few  people.  "Where 
land  is  sown  with  wheat  it  does  not  make  so  much 
difference. to  Society  about  the  ownership,  because  the 
wheat  will  be  produced,  and  is  certain  to  come  on  the 
market ;  but  a  private  park  is  practically  taken  out  of 
use  for  the  satisfaction  of  the  world's  wants,  except 
for  those  of  a  single  family.  Where  land  is  abundant, 
so  that  every  family  can  have  a  park  if  able  and  will- 
ing to  pay  the  price,  there  is  no  objection  to  such  a 
use.  The  general  right  of  the  public  to  control  the 
Resources  of  Nature  must  not  at  any  time  be  lost 
sight  of.  If  land  is  wanted  for  public  uses,  it  must 
be  taken,  with  compensation  for  improvements.  If 
the  use  made  of  land  by  its  holder  is  inconsistent 
with  public  policy,  or  if  it  is  not  used  for  the  satis- 
faction of  wants,  the  public  have  the  right  to  inter- 
fere. 

PUBLIC  USE  OF  THE  RESOURCES  OF  NATURE.— 
Not  all  of  the  Resources  of  Nature  should  be  managed 
by  private  enterprise.  In  some  few  instances  the  gov- 


ECONOMICAL    USE    OF    NATURAL   WEALTH.        237 

•eminent  may  properly  attempt  their  improvement  for 
the  general  good  of  the  people.  The  most  common 
instances  are  roads,  harbors,  and  public  parks.  Any 
Natural  Resource  which  can  be  used  by  the  people  in 
common  is  better  in  the  hands  of  the  government. 

O 

The  harbors  on  the  coast  are  improved  by  national 
authority  in  order  that  they  may  be  used  by  the  ships 
of  all  nations.  So  natural  water-ways,  such  as  lakes 
and  rivers,  are  properly  improved  by  the  government. 
It  would  be  very  unfortunate  if  they  should  ever  be- 
come private  property.  On  the  same  principle,  gov- 
ernments have  frequently  constructed  canals  ;  and  the 
Erie  Canal  in  New  York  is  an  example  of  an  arti- 
ficial water-way,  built  and  maintained  at  the  public 
expense,  and  free  to  all  who  wish  to  use  it.  This  prin- 
ciple of  free  public  water-ways  should  be  extended  as 
far  as  possible. 

The  difference  between  a  canal  and  a  railway  is 
that  it  is  easy  to  use  the  former  in  common,  while  the 
latter  must  almost  of  necessity  be  managed  by  a  single 
company.  Each  boat  may  be  owned  by  a  different 
person,  who  runs  it,  under  simple  regulations,  to  suit 
himself. 

Country  wagon  roads  and  city  streets  are  also  used 
in  common,  and  are  properly  made  and  maintained  by 
public  authority. 

Within  the  last  few  years  more  attention  has  been 
paid  to  public  parks,  which  the  government  undertakes 
to  improve  and  maintain  for  the  benefit  of  all  users. 
The  famous  Yellowstone  Park  is  a  credit  to  our  na- 
tion. All  land  not  fitted  for  private  use;  all  land 


238  ECONOMICAL    USE    OF    THE   RESOURCES. 

about  the  head-waters  of  rivers,  and  in  mountains.,, 
where  a  forest  should  be  maintained,  as  well  as  such 
striking  pieces  of  natural  scenery  as  the  Yellowstone 
Park,  should  forever  remain  in  the  possession  of  the 
government.  A  considerable  part  of  the  public  land 
now  unsold  might  well  be  retained  for  park  purposes, 
and  such  land  as  that  of  the  Adirondack  Mountains 
may  well  be  purchased  for  the  maintenance  of  forests. 

The  public  park  principle  is  liable  to  abuse  for 
the  reason  of  our  unfamiliarity  with  land  under  na- 
tional control.  Special  privileges  have  been  granted 
in  many  instances,  which  amount  almost  to  private 
ownership.  It  must  be  insisted  that  any  privilege,, 
such  as  that  of  erecting  a  building,  is  for  only  a  limited 
period,  and  that  a  variable  rent  shall  be  paid,  which 
shall  be  increased  each  year  as  the  value  of  the 
privilege  increases.  On  the  island  of  Mackinac,  in 
Michigan,  there  is  a  national  park  which  is  practi- 
cally the  private  park  of  a  few  summer  residents,  and 
maintained  by  the  government  mainly  for  their  pleas- 
ure. Building  leases  have  been  given  without  proper 
restrictions.  All  leases,  and  all  park  privileges,  should 
be  granted  only  on  the  principle  before  mentioned, 
viz.:  that  of  the  payment  of  the  full  value  of  the  use 
of  the  land  each  year,  and  an  increase  of  the  rent  as 
the  value  of  the  privilege  increases. 

There  will  be,  altogether,  a  very  considerable  por- 
tion of  the  Natural  Resources  which  ought  to  remain 
under  the  control  of  the  government,  to  be  used  by  all 
the  people  in  common.  The  atmosphere  is,  of  course^ 
to  be  used  in  common.  The  waters  of  lakes  and 


ECONOMICAL    USE    OF   NATURAL    WEALTH.        239 

rivers  are  also  to  be  navigated  in  common;  and  har- 
bors must  be  maintained  at  the  public  expense.  The 
extension  of  the  canal  system,  with  roads  and  streets, 
will  retain  a  considerable  portion  of  the  land  for  pub- 
lic use;  and  the  wide  extension  of  the  park  system 
will  bring  a  large  acreage  of  land  into  public  use. 
Parks  in  cities  are  the  common  land  of  the  people. 
All  Natural  Resources  that  can  be  properly  devoted  to 
public  use  should  be  improved  and  maintained  by  the 
State. 

We  have  a  good  deal  to  learn  in  the  way  of  for- 
estry from  Europe.  In  many  localities — such  as  the 
Adirondack  Mountains — land  should  be  condemned 
and  purchased  by  the  government.  It  was  a  terrible 
blunder  to  sell  it,  but  it  had  better  be  re-purchased  be- 
fore the  price  is  carried  higher  by  the  increase  of  popu- 
lation. Narrow  strips  of  land  on  great  lakes  and  the 
ocean  should  be  reserved  or  secured  for  public  use.  It 
is  an  outrage  that  one  may  fence  the  people  off  from 
the  sea.  Yet  all  along  the  Atlantic  coast  the  choicest 
portions  of  the  land  are  being  occupied  by  private 
residents  who  control  to  the  water,  and  virtually  own 
the  sea.  A  narrow  strip,  like  a  public  highway,  should 
always  intervene  between  the  private  residence  and 
the  water.  In  cities  on  the  coast,  land  has  become  too 
valuable  to  purchase  for  public  use.  The  large  gov- 
ernment forests,  often  about  the  head-waters  of  rivers, 
under  intelligent  management  would  produce  a  great 
deal  of  timber  which  could  be  cut  so  as  not  to  destroy 
the  forest  nature  of  the  land.  The  sale  of  the  timber 
should  be  a  source  of  revenue.  The  acreage  of  land  in 
16 


240          ECONOMICAL    USE    OF   THE   RESOURCES. 

highways,  public  parks,  and  government  forest  should, 
in  the  older  States,  be  vastly  greater  than  it  is. 

Special  provision  should  be  made  for  mines.  With 
such  placer  mines  as  were  worked  in  the  early  days  of 
California,  nothing  is  better  than  to  allow  each  man 
as  many  feet  of  ground  as  he  can  work,  so  long  as  he 
works  it ;  but  in  quartz  mining,  with  costly  machinery, 
the  government  should  retain  control  of  the  mines, 
making  some  special  provision  for  their  working.  The 
leasing  of  land  for  agricultural  purposes  should  not 
carry  with  it  any  title  to  the  minerals  that  may  be 
found  beneath  its  surface. 

The  fish  of  the  sea  are  public  property,  and  the 
waters  in  which  fishing  is  carried  on  should  forever  be 
the  property  of  the  entire  people.  Where  it  is  nec- 
essary to  set  aside  a  particular  space  of  water  for  such 
industry  as  oyster  fishing,  it  should  be  leased  by  the 
government  to  those  who  use  it. 

The  question  of  water-rights  in  irrigation  is  coming 
to  the  front  in  the  West.  There  are  vast  tracts  of 
land  worthless  except  with  irrigation.  He  who  owns 
the  water  controls  the  land,  virtually  owns  all  the 
land  the  water  supplies,  since  he  can  put  his  own  price 
on  it  unless  restricted  by  legislation  or  previous  con_ 
tract.  Yet  water  is  one  of  the  Resources  of  Nature, 
which  used  to  be  cited  by  the  older  Political  Econ- 
omists as  an  example  of  something  without  value  (ex- 
change value),  because  so  common.  All  water-works 
for  irrigation  purposes  should  either  be  owned  by  the 
State,  or  subjected  to  a  strict  control.  The  water 
should  be  regarded  as  belonging  to  the  people,  and 


ECONOMICAL    USE   OF   NATURAL    WEALTH.        241 

no  one  permitted  to  control  it  except  under  the  power 
of  the  State  to  fix  a  price  for  the  service.  There  is 
no  reason  why  the  water-works  should  not  be  held 
by  the  owners  of  the  land  they  supply,  and  managed 
by  them  as  a  company. 

With  these  exceptions  the  use  of  the  Natural  Re- 
sources is  best  left  to  private  enterprise.  Where  they 
have  not  been  sold  they  should  be  leased  to  private 
parties  at  a  variable  rent,  as  has  been  described. 

If  this  chapter  has  appeared  to  the  reader  to  con- 
tain a  great  deal  about  government  management,  it 
should  be  remembered  that  this  is  because  the  Re- 
sources of  Nature  are  of  right  public  property — the 
heritage  of  all  the  people,  of  each  generation  as  it 
<comes  on  the  stage  of  action.  Hence,  it  is  impossible 
to  treat  of  the  use  of  Natural  Wealth  without  more  or 
less  discussion  regarding  government  management, 
.since  the  government  is  the  trustee  of  the  people's 
property,  and  their  agent  for  its  use. 

The  greater  part  of  the  land  will  always  be  under 
private  management,  if  not  under  private  ownership. 


CHAPTEK  III. 

ECONOMICAL  USE  OF  PRODUCED  WEALTH. 

The  older  works  on  Political  Economy  treated  of 
the  "  production  of  wealth  "  under  the  heads  of  land, 
labor  and  capital.  No  term  in  economic  science  is 
more  misleading  than  this  same  "  capital,"  although  its 
popular  use  in  practical  business  is  unexceptionable. 
Capital  is  that  part  of  Produced  Wealth  which  is  used 
in  the  production  of  other  wealth.  Produced  Wealth 
may  be  used  as  capital  one  year,  and  not  the  next. 
The  term  capital  also  leads  one  to  imagine  either  a, 
sum  of  money  or  a  body  of  Produced  Wealth  which 
can  be  turned  to  any  form  of  production  the  owner 
desires.  This  is  far  from  the  case.  It  is  better  ta 
treat  things  as  they  are,  and  to  understand  more  par- 
ticularly what  we  are  talking  about. 

There  is  no  Produced  Wealth  which  can  be  used  for 
every  purpose,  and  very  little  that  has  any  great  variety 
of  uses.  As  a  general  rule,  Produced  Wealth  must 
be  used  for  its  original  purpose,  or  for  some  other 
that  is  closely  related.  A  large  part  of  the  Produced 
Wealth  of  the  world  is  in  the  form  of  dwellings. 
These  can  be  turned  into  storerooms,  or  factories,  but 
when  this  is  done  at  some  cost,  they  are  not  found  to 
be  as  well  adapted  as  buildings  erected  specially  for 
the  purpose.  Very  little  machinery  can  be  used  for 

(242) 


ECONOMICAL  USE  OF  PRODUCED  WEALTH.   243 

purposes  other  than  those  designed.  The  vast  capital 
in  roads  of  all  kinds  can  be  used  for  nothing  else. 
The  stock  of  clothing  is  of  no  use  except  to  be  worn, 
and  even  the  fo'od  supply  of  the  nation  serves  only  one 
purpose.  Whence,  then,  comes  this  popular  idea  that 
•"  capital "  can  be  used  for  any  form  of  production  de- 
sired? Simply  from  the  fact  that  the  greater  portion 
of  Produced  Wealth  is  consumed  in  the  present  sup- 
port of  human  beings — that  it  supports  labor,  and 
labor  can  be  turned  to  the  production  of  almost  any- 
thing we  will.  The  power  of  the  capitalist  consists  in 
this :  that  he,  with  the  houses,  and  clothing,  and  food 
supply  at  his  command,  may  employ  all  the  laborers 
he  can  support ;  and  he  can  set  the  laborers  at  any 
sort  of  work  he  pleases.  The  producer's  capital  usu- 
ally consists  of  two  distinct  parts :  first,  the  buildings 
and  machinery;  second,  command  over  the  food  sup- 
ply and  stock  of  wealth  on  hand  for  the  immediate 
satisfaction  of  wants,  with  which  he  employs  labor. 
This  labor  he  sets  at  work  in  the  line  of  production 
for  which  his  machinery  is  fitted.  The  use  of  almost 
all  forms  of  capital,  and  all  Produced  Wealth,  is  fixed 
by  its  nature  within  very  narrow  limits.  The  wealth 
is  rapidly  consumed  and  worn  out,  and  labor  can  be 
turned  to  the  production  of  the  same  or  new  forms  of 
Produced  Wealth.  Instead  of  talking  about  capital, 
then,  let  us  talk  of  the  various  forms  of  Produced 
Wealth,  and  the  use  of  each. 

The  purpose  for  which  permanent  Produced  Wealth 
will  be  used  is  largely  determined  by  the  nature  of 
the  wealth.  A  cotton  factory  can  produce  nothing 


244          ECONOMICAL    USE   OF   THE   RESOURCES. 

but  cotton  goods.  If  there  is  a  lessened  demand  for 
the  product,  the  owner  in  some  instances  continues  to- 
run  the  factory,  turning  labor  in  that  direction  at  a 
positive  loss,  rather  than  have  the  mill  stand  idle.  He 
fears  either  that  it  may  take  more  injury  when  idle 
than  when  running,  or  that  the  scattering  of  the  old 
hands,  and  the  loss  of  customers,  may  be  a  greater  in- 
jury than  a  temporary  loss  in  production  at  market 
prices.  He  submits  to  the  present  loss  in  the  hope  of 
some  profit  in  the  future ;  otherwise  he  would  close  the 
mill  permanently,  and  consider  the  labor  invested  in 
the  production  of  the  machinery  as  so  much  misdi- 
rected effort. 

Almost  all  machinery  is  limited  to  the  use  for  which 
it  was  made.  Buildings  are  limited  in  their  use  to  the 
purposes  for  which  they  were  designed,  or  others  very 
similar.  Roads  are  of  no  use  except  for  travel.  We 
may  produce  almost  any  kind  of  wealth  in  the  future ; 
but  the  wealth  now  in  existence  must  be  used  mainly 
for  the  purposes  for  which  it  was  designed. 

Produced  Wealth  is  either  permanent  or  consum- 
able. Nothing  made  by  man  has  the  permanency  of 
the  Resources  of  Nature  ;  and  none  of  our  Produced 
Wealth  is  more  than  relatively  permanent.  Con- 
sumable wealth  is  destroyed,  or  withdrawn  from  the 
public  stock,  as  soon  as  used,  and  must  be  replaced 
year  by  year.  Hence,  it  is  easier  to  make  any 
changes  in  the  form  of  Consumable  than  of  Per- 
manent Wealth,  because  we  can  use  labor  to  pro- 
duce something  different  as  soon  as  the  old  is- 
consumed. 


ECONOMICAL  USE  OF  PRODUCED  WEALTH.   245 

It  is  not  expected  that  the  changes  in  the  nature  of 
the  Produced  Wealth  of  a  nation  will  be  very  great 
from  year  to  year.  Although  almost  the  entire  food 
supply  is  consumed,  and  we  might  produce  a  supply 
of  an  entirely  different  character,  yet  practically  the 
desires  of  the  people  are  best  satisfied  by  producing 
very  much  the  same  kinds  of  food  as  have  been  con- 
sumed. We  need  about  the  same  number  of  bushels 
of  wheat  this  year  as  last.  Fashions  in  clothing, 
and  other  goods  which  are  consumed  in  satisfy- 
ing wants  directly,  change  to  a  greater  extent;  but 
it  is  rather  in  the  form  than  the  essential  nature 
of  the  goods.  However,  the  wearing  out,  and  the 
production  of  new  Consumable  Wealth,  give  oppor- 
tunity for  as  wide  a  variation  as  the  desires  of  the 
people  demand. 

We  see,  here,  the  mistake  of  certain  merchants  who 
have  held  goods  year  after  year  in  the  hopes  of  sell- 
ing at  the  original  price.  The  changes  in  fashion — 
the  people's  desires — make  such  goods  almost  worth- 
less. The  wise  merchant  disposes  of  his  goods  within 
a  comparatively  short  time  after  their  purchase,  evert 
if  it  should  be  necessary  to  lose  something  in  the? 
sale.  He  knows  the  liability  of  a  change  in  the  de- 
mand. It  is  better,  indeed,  that  the  wants  of  the; 
future  for  consumable  goods  be  supplied  by  the  pro- 
ductions of  the  future  rather  than  by  saving  stocks; 
from  the  present. 

Permanent  Wealth  endures  longer,  and  there  may 
be  a  very  considerable  change  in  the  form  of  that 
which  replaces  it.  Indeed,  improvements  in  machin- 


246  ECONOMICAL    USE    OF    THE    RESOURCES. 

ery  are  so  rapid  that  frequently  it  does  not  pay  to  wait 
for  a  machine  to  wear  out  before  replacing  it  with 
something  better  adapted  to  the  purpose. 

Permanent  Produced  Wealth  should  be  Used 
Continuously.  It  is  seldom  that  it  is  greatly  injured 
by  use.  Most  things  rust  out  quicker  than  they 
wear  out.  A  dwelling  properly  taken  care  of  will 
last  longer  if  used  than  when  standing  empty.  It  is 
not  always  possible  to  use  all  Permanent  Wealth, 
because  such  use  requires  labor,  which  may  be  more 
profitably  employed  at  something  else.  This  shows 
either  that  the  general  course  of  production  has  be- 
come deranged,  or  that  there  has  been  more  of  a 
particular  kind  of  this  form  of  wealth  produced  than 
was  needed,  and  its  production  was  therefore  waste. 

Permanent  Produced  Wealth  should  be  Used 
with  as  little  injury  as  possible.  The  needless  in- 
jury to  this  form  of  wealth  is  very  great.  Every 
owner  of  machinery  understands  the  necessity  of  care. 
Valuable  dwellings  are  often  injured  more  by  a  shift- 
less family  than  their  use  is  worth.  It  is  true  this 
can  occur  only  with  comparatively  costly  dwellings. 
.It  will  not  cost  as  much  to  build  a  wigwam  as  its 
ase  is  worth  for  a  single  year.  If  it  be  entirely  de- 
stroyed by  a  year's  use,  the  gain  is  still  greater  than 
the  loss ;  and  there  are  some  families  which  are  fit 
only  to  live  in  a  wigwam.  A  dwelling  costing  a 
hundred  thousand  dollars  can  easily  be  injured  by  a 
year's  use  more  than  the  cost  of  building  a  moderate 
house,  which  would  answer  the  real  needs  of  the 
family  equally  well.  Sometimes  a  costly  building 


ECONOMICAL  USE  OF  PKODUCED  WEALTH.   247 

stands  empty  for  the  very  reason  that  the  owner  can 
not  get  enough  to  pay  for  the  injury  to  it  by  such 
families  as  offer  themselves.  One  of  the  difficulties 
found  in  attempting  to  improve  the  condition  of  the 
lower  classes  in  large  cities,  is  in  inducing  them  to 
take  proper  care  of  decent  tenement  houses.  They 
destroy  so  much  that  no  owner  can  afford  to  provide 
accommodations  of  even  moderate  cost. 

SAVINGS. — How  muck  of  the  wealth  produced  each 
year  will  be  applied  to  the  satisfaction  of  current 
wants,  and  how  much  will  be  saved  for  the  satisfac- 
tion of  future  wants,  or  for  use  as  capital  in  further 
production  ?  Usually  almost  all  that  is  produced  is 
expended  in  the  satisfaction  of  present  wants,  and  a 
very  small  proportion  is  saved.  Yet  in  some  instances 
men  save  much  more  than  half,  sometimes  nearly  all,  of 
the  share  of  the  total  product  which  falls  to  them.  A 
great  deal  depends  on  accident.  A  farmer  in  a  new 
country  may  find  it  impossible  by  any  effort  to  gain 
more  than  the  most  meager  living  for  his  family ;  yet, 
in  order  to  gain  this  meager  living,  he  is  compelled  to 
improve  his  farm.  He  drains  a  swamp  to  get  a  crop 
for  the  next  year,  but  the  swamp  once  drained  is  good 
land  for  all  time.  He  builds  his  fences  for  this  year ; 
he  can  do  nothing  without  them,  but  they  are  accumu- 
lated wealth  ;  so  that  by  sheer  force  of  necessity  he 
is  compelled  to  accumulate.  Had  he  lived  in  a  city,  he 
would  not  have  put  his  family  on  this  short  allowance 
in  order  to  save,  and  would  have  saved  nothing.  The 
necessity  of  a  tool  for  present  work  leads  to  saving  to 
pay  some  one  for  making  it.  It  is  in  some  such  way 


248          ECONOMICAL    USE   OF   THE   RESOURCES. 

as  this  that  the  accumulation  of  capital  begins.  At 
first  it  is  almost  always  by  self-sacrifice,  but  some- 
times the  accumulated  Produced  Wealth  returns  its 
cost  every  year.  Many  machines  have  paid  a  hundred 
per  cent,  on  the  labor  employed  in  their  construction. 
Saving  depends  on  habit,  on  the  custom  of  one's  as- 
sociates, and  on  the  probable  return  one  is  likely  to 
obtain  from  the  use  of  his  savings  over  and  above 
their  preservation. 

It  should  also  be  noted  that  saving  depends  on  one's 
income  in  comparison  with  that  of  those  about  him, 
and  the  style  of  living  adopted  by  the  society  he  has 
chosen.  With  the  majority  of  people  nothing  can  be 
saved  except  by  the  most  painful  self-denial ;  it  means 
poorer  food,  or  clothing,  or  dwellings. 

After  one  has  the  necessities  of  life  and  can  live  as 
well  as  his  neighbors,  he  may  easily  save.  If  he  go 
into  different  surroundings,  the  expenditure  of  ten  or 
a  hundred  times  as  much  may  seem  necessary,  and  he 
may  find  saving  more  difficult  than  with  a  smaller  in- 
come among  his  old  acquaintances. 

A  point  is  frequently  reached  in  the  life  of  some 
individuals  where  saving  requires  no  sacrifice.  By 
various  means,  millions  of  dollars  of  profits  have  come 
into  the  hands  of  a  few  individuals.  There  are  three 
things  one  can  do  with  it.  First,  save  to  control  great 
business  interests,  taking  more  pleasure  in  business 
than  in  expenditure  after  the  manner  of  a  Euro- 
pean with  an  inherited  fortune.  In  this  case  the 
wealth  of  the  country  is  increased.  Second,  he  can 
endow  public  institutions,  or  otherwise  contribute  to- 


ECONOMICAL  USE  OF  PRODUCED  WEALTH.   24 £ 

the  benefit  of  the  people.  There  is  in  this  country  a, 
very  general  idea  that  one  is  under  obligation  to  do 
something  of  this  sort.  It  is  held  that  his  wealth  is 
the  result  of  the  efforts  of  others  as  well  as  his  own,, 
that  his  ownership  is  not  absolute,  and  that  he  is  in 
some  sense  a  trustee  for  the  people.  Universities  and 
great  libraries  have  been  thus  endowed.  The  wealth 
is  here  saved,  and  the  interest  paid  for  the  use  of  it 
goes  to  satisfy  the  more  important  intellectual  wants 
of  many  people.  Great  credit  is  due  to  men  who  use 
a  large  part  of  their  accumulations  in  this  way.  A 
considerable  portion  of  such  wealth  is  also  used  in  di- 
rect contribution  for  the  satisfaction  of  the  wants  of 
others.  Schools  and  churches  are  maintained,  mis- 
sionaries are  sent  to  other  lands,  contributions  are 
made  to  starving  peoples.  In  the  third  place,  one 
may  spend  all  of  his  annual  income  on  himself  and 
family. 

Although  the  savings  of  those  with  large  incomes 
in  this  country  are  great,  the  total  savings  of  those 
with  small  incomes  are  much  larger.  We  have  many 
millionaires,  but  very  few  men  with  an  income  of  a  mil- 
lion a  year.  Suppose  there  were  a  hundred.  If  they 
chose,  they  could  save  practically  all  they  receive ;  yet 
the  total  annual  saving  would  be  only  a  hundred  mil- 
lions a  year.  If  ten  million  laborers  were  to  save  ten, 
dollars  a  year,  each,  the  total  savings  would  be  the 
same.  The  greater  part  of  the  savings  are  the  accu- 
mulation of  men  of  moderate  means  who  wish  capital 
to  do  business.  Many  negroes,  since  the  war,  have 
accumulated  comfortable  fortunes.  Many  a  poor  boy 


250          ECONOMICAL   USE   OF   THE   RESOURCES. 

becomes  rich,  both  because  he  makes  money,  and  be- 
cause he  saves  it.  Small  savings  can  accumulate  only 
a  small  fortune ;  one  must  make  a  great  deal  of  money 
if  he  is  to  save  a  great  deal ;  but  the  small  savings  of 
great  numbers  of  people,  continued  for  a  lifetime, 
amount  to  vast  sums  in  the  end. 

Savings  must  be  viewed  from  two  standpoints,  that 
of  the  individual,  and  that  of  the  nation  at  large. 
Every  person  would  like  to  save  a  fortune  were  it  not 
for  the  sacrifice  of  present  comfort  involved.  Viewed 
from  a  national  standpoint,  it  is  doubtful  if  this  coun- 
try needs  a  rapid  accumulation  of  Produced  Wealth. 
We  are  well  supplied  with  railroads  and  machinery. 
With  the  exception  of  better  dwellings  for  the  mass  of 
the  people,  a  dictator  might  hold  that  it  were  better  if 
nearly  all  the  product  of  the  labor  of  each  year  were 
expended  in  the  satisfaction  of  the  wants  of  that  year. 
It  depends,  also,  in  whose  hands  the  savings  are.  The 
accumulation  of  small  fortunes  is  greatly  to  the  in- 
terest of  the  country.  The  opportunities  which  capi- 
ital  gives  to  active  owners,  competent  to  use  it,  are 
often  worth  a  hundred  times  as  much  as  the  mere  in- 
terest on  the  sum.  The  great  savings  of  the  rich,  by 
decreasing  the  rate  of  interest,  take  away  part  of  the 
inducement  for  the  poor  to  save.  They  are  not  will- 
ing to  make  the  sacrifice  necessary  to  save,  when  the 
sum  invested  at  interest  would  bring  so  little.  Yet 
many  a  good  business  manager,  if  he  had  saved  a  little 
capital  in  his  youth,  would  be  able  to  use  it  to  place 
himself  in  independent  business.  Savings  depend  to 
a  considerable  extent  on  the  interest  which  capital 


ECONOMICAL  USE  OF  PRODUCED  WEALTH.   251 

brings.     Few  men  realize  how  much  the  mere  control 
of  capital  may  some  time  be  worth  to  them. 

The  use  of  the  Resources  for  the  Satisfaction  of 
Wants  by  individuals,  is  a  matter  of  practical  busi- 
ness, involving  endless  details  and  training.  The 
method  of  use  determines  one's  financial  success  in 
life ;  determines  how  well  he  is  able  to  provide  for 
those  dependent  on  him  ;  and  how  much  he  is  able  to 
do  for  others,  and  for  the  world.  Some  men  become 
rich  by  using  the  resources  at  their  command,  even 
though  they  be  very  meager  ;  other  men  suffer  pov- 
erty, although  they  were  fortunate  in  the  beginning  in 
having  control  of  far  more  and  better  resources  than 
their  successful  neighbor.  A  great  deal  depends  on 
what  one  has  at  the  beginning,  a  great  deal  on  luck ; 
but,  beyond  this,  one's  material  success  is  due  to  the 
skill  with  which  he  uses  the  resources  here  enumer- 
ated. Questions  of  morals,  of  course,  enter  in  ;  and 
we  are  not  to  forget  that  one  sometimes  succeeds  by 
dishonest  and  immoral  use  of  the  resources  of  which 
he  obtains  control.  The  promoters  of  the  Louisiana 
lottery  are  supposed  to  have  accumulated  enormous 
fortunes  out  of  money  taken  from  those  who  gambled 
with  them.  The  gambling-tables  at  Monte  Carlo  are 
very  profitable  to  their  owners,  though  they  have 
driven  many  lives  to  suicide. 


CHAPTER  IV. 

THE  USE  OF  THE  RESOURCE  OF  SOCIETY. 

One  of  the  merits  claimed  for  this  work,  is  that  it 
takes  account  of  Society  as  the  means  of  satisfying 
human  wants,  as  well  as  the  productions  of  human  in- 
dustry. We  have  seen  in  Book  II.  how  important  is 
the  character  of  the  population  of  any  country.  Some 
society  is  like  a  heap  of  waste  refuse,  not  only  useless, 
but  unsightly,  and  in  the  way.  Good  society  is  one  of 
the  most  important  means  for  the  satisfaction  of  wants, 
after  the  simple  craving  for  food  has  been  satisfied. 
In  this  book  we  have  to  do  only  with  the  use  of  such 
society  as  happens  to  exist  in  any  nation. 

There  is,  first,  the  necessity  of  separation.  The 
convicted  criminal  must  be  placed  in  penitentiaries, 
workhouses  or  reformatory  institutions ;  otherwise  he 
is  a  constant  menace  to  society.  There  is,  in  addition 
to  this,  a  criminal  class  which  the  future  will  doubtless 
deal  with.  An  habitual  criminal  may  be  all  the  more 
dangerous  for  having  spent  a  few  months  in  jail  or  the 
penitentiary.  We  shall,  perhaps,  find  it  necessary  to 
separate  from  society  every  habitual  criminal,  until 
there  is  some  reason  for  believing  that  he  has  so  far 
reformed  as  to  be  safely  trusted  at  large. 

In  a  perfect  society,  each  individual  or  family,  while 
tenacious  of  its  own  rights,  would  be  equally  unwilling 
to  interfere  with  the  rights  of  others.  They  also  have 

(252) 


USE    OF    SOCIETY.  253 

some  conception  of  what  those  rights  are.  With  so- 
ciety as  at  present  constituted,  even  in  the  United 
States,  it  is  necessary  to  insist  upon  quite  strict  regula- 
tions in  order  to  make  it  of  any  value  in  the  satisfac- 
tion of  wants.  The  majority  of  the  people  have  no 
thought  that  anything  is  disagreeable  to  others  which 
is  not  disagreeable  to  themselves.  A  very  large  num- 
ber have  no  hesitancy  in  inflicting  upon  others  what  is 
•disagreeable  even  to  themselves.  The  protection  of 
individual  rights,  where  people  are  massed  together  as 
they  are  in  cities,  doubtless  requires  very  much  stricter 
regulations  than  at  present  exist.  The  effort  of  the 
future  will  be  to  make  a  city  a  desirable  place  for  all 
•classes  to  live  ;  and  when  this  is  done,  wants  will  be 
much  better  satisfied,  even  with  the  same  income  as  at 
present.  Unnecessary  noises  will  be  abolished.  There 
will  be  some  means  of  rapid  transportation  which  will 
not  make  every  house  within  the  vicinity  of  the  line  an 
unfit  place  to  live  in.  The  ringing  of  bells  and  blow- 
ing of  steam  whistles  between  certain  hours  will  be 
prohibited.  Disagreeable  street  cries  will  cease.  The 
posting  of  unsightly  advertisements  on  blank  walls, 
and  the  disfigurement  of  natural  scenery  by  advertise- 
ments, will  be  forbidden.  The  distributing  of  hand- 
bills on  the  streets,  now  prohibited  in  many  cities,  will 
then  cease  everywhere.  The  model  city  of  the  future 
will  be  one  where  a  person  can  walk  the  streets  unmo- 
lested, unasked  to  purchase  what  he  does  not  want, 
undisturbed  by  street  cries  and  unnecessary  racket. 
Beggars  and  the  unfortunate  cripples  will  also  be  re- 
moved to  places  where  they  can  have  proper  care ;  it 


254          ECONOMICAL    USE   OF   THE   RESOURCES. 

will  be  recognized  that  those  who  are  disfigured  and! 
repulsive  in  appearance  are  entitled  to  the  support  of 
the  community,  which  will  take  pleasure  in  knowing 
that  they  are  cared  for  in  proper  institutions  ;  but  they 
will  not  be  permitted  to  thrust  themselves  into  the 
view  of  every  passer-by  to  work  upon  his  sympathies 
in  order  to  beg. 

For  the  sake  of  all  persons,  sanitary  regulations- 
must  be  enforced  against  those  who  have  no  regard 
for  cleanliness  themselves.  In  short,  a  city  must  be 
made  a  habitable  place  to  live  in,  with  cleanly  and 
healthful  surroundings  for  the  poor  as  well  as  the  rich. 
The  difference  between  cities  naturally  depends  on 
the  character  of  the  people  who  inhabit  them,  and 
the  way  in  which  they  are  compelled,  to  live.  The  se- 
curing of  advantages  described  will  be  worth  more  to- 
any  workingman  than  a  considerable  advance  of  his 
wages,  and  will  be  worth  still  more  to  those  of  larger 
incomes. 

It  is  said  that  men  can  not  be  made  moral  by  legis- 
lation. While  this  is  true  in  one  sense,  it  is  also  true 
that  legislation  and  the  enforcement  of  law  have  a, 
great  deal  to  do  with  the  morality  and  the  social  life 
of  any  people.  The  lowest  immoral  classes  can  be 
prevented  from  outward  acts.  The  lower  social  classes- 
can  be  compelled  to  live  in  a  way  less  disagreeable  to 
more  respectable  neighbors.  Vice  can  be  compelled 
to  hide  itself  from  public  gaze.  The  very  compelling 
of  the  people  to  live  outwardly  in  a  certain  way  for  a 
generation  or  two,  would  most  powerfully  affect  their 


USE    OF    SOCIETY.  255 

character,  and  what  is  done  under  compulsion  by  one 
generation,  may  become  the  habit  of  the  second. 

A  great  deal  can,  therefore,  be  done  to  make  society 
outwardly  more  respectable ;  and  to  make  it  of  far 
more  use  in  the  satisfaction  of  the  wants  of  all.  A 
great  deal  can  be  done  in  repressing  natural  outward 
manifestations  of  those  who  occupy  the  place  of  social 
rubbish  and  disagreeable  waste. 

A  still  more  important  matter  is  in  the  development 
of  a  better  society  in  the  future.  "We  can  not  do 
much  with  a  savage  unless  he  is  caught  young  ;  but 
under  proper  influence  children  of  even  the  most  ob- 
jectionable classes  may  be  less  a  curse  to  the  body  pol- 
itic than  their  fathers  have  been,  and  may  even  come 
to  be  good  citizens.  The  public  schools,  the  churches, 
and  missionary  enterprises,  are  doing  a  great  deal  in 
this  direction,  and  are  our  chief  dependence. 


17 


CHAPTEE  Y. 

THE  PURPOSES  FOR  WHICH  THE  RESOURCES  SHALL 
BE  USED. 

What  goods  shall  be  produced  ?  What  wants  shall 
be  satisfied?  What  direction  shall  the  world's  produc- 
tion take,  and  how  shall  its  industry  be  employed? 
Shall  we  dig  for  diamonds  in  distant  lands  ?  Shall  we 
erect  costly  State-houses  ?  For  what  purposes  shall 
these  vast  resources  of  nature,  of  labor,  of  goods  pro- 
duced by  man,  of  society,  be  used  ?  It  is  one  thing 
to  use  the  resources  without  waste,  and  so  as  to  accom- 
plish the  greatest  results;  and  another  to  determine 
what  shall  be  the  end  of  all  this  use,  what  sort  of 
wants  shall  be  satisfied. 

We  have  already  seen  that  the  purpose  for  which 
unost  Produced  Wealth  shall  be  used  is  limited  by  the 
.nature  of  the  wealth  itself.  A  paper  mill  can  not 
well  be  used  for  anything  except  to  make  paper,  yet  it 
may  make  paper  of  various  grades,  as  desired.  The 
purposes  for  which  most  Produced  Wealth  may  be 
used  is  limited,  not  determined,  by  the  nature  of  the 
wealth. 

To  a  less  extent  this  is  true  of  Natural  Wealth. 
All  agricultural  land  is  not  fitted  for  wheat  or  sugar 
cane,  yet  most  land  may  produce  a  considerable  va- 
riety of  crops. 

It  will  be  sufficient  if  we  consider  the  single  Re- 
(256) 


WHAT    SHALL    BE   PRODUCED.  257 

source  of  Labor.  The  purpose  for  which  any  one  Re- 
source is  used  determines  that  of  the  others.  If  a 
given  acreage  of  land  is  to  be  set  aside  for  the  pro- 
duction of  wheat,  this  means  that  a  certain  amount  of 
labor  and  capital  must  be  used  in  the  same  production. 
If  a  woolen  factory  is  to  run  continuously,  it  means 
that  labor  must  be  employed  in  this  mill,  and  that, 
somewhere,  land  must  be  devoted  to  sheep-raising. 
Since  land,  labor  and  capital  are  combined  in  almost 
every  form  of  production,  when  we  determine  the  use 
of  one  of  them  we  have  practically  fixed  the  use  of 
the  others. 

It  is  more  convenient  to  select  Labor  rather  than 
either  of  the  other  resources,  because  labor  is  more 
readily  directed.  The  purposes  for  which  the  other 
resources  will  be  used  will  need  no  further  considera- 
tion than  has  been  given  in  previous  chapters. 

THE  PURPOSES  FOR  WHICH  LABOR  SHALL  BE 
USED. — The  purposes  for  which  the  Resources  are 
used  may  be  even  more  important  than  the  manner  of 
their  use.  We  may  have  a  hundred  thousand  men 
for  a  year  digging  holes  in  the  ground,  and  at  the  end 
we  have  only  holes  in  the  ground.  If  these  men  are 
employed  in  digging  the  Nicaragua  canal,  we  have  at 
the  end  a  canal  connecting  oceans,  of  great  value  in 
satisfying  future  wants.  There  is  a  great  deal  of  mis- 
directed effort  and  waste  of  labor. 

The  class  of  wants  satisfied  and  the  number  of  peo- 
ple enabled  to  live  in  comfort  also  depend  upon  the 
purpose  for  which  labor  is  used.  If  a  large  portion 
of  the  labor  of  a  nation  is  expended  in  personal  ser- 


258  ECONOMICAL    USE    OP   THE    RESOUKCES. 

vices,  as  in  some  of  the  old  countries,  there  is  only  the 
satisfaction  of  the  wants  of  a  few  people.  So,  also,, 
if  labor  is  expended  in  the  production  of  costly  wines 
and  expensive  luxuries.  A  thousand  men  may  be  em- 
ployed in  the  production  of  some  little  luxury  for  the 
prince  or  queen.  On  the  other  hand,  if  the  greater 
portion  of  the  labor  of  a  nation  is  expended  in  the 
production  of  food,  clothing,  and  the  common  comforts 
and  necessities  of  life,  the  very  abundance  of  these 
makes  them  cheaper,  and  brings  them  within  a  price 
that  the  multitudes  can  afford  to  pay.  This,  however,, 
is  only  saying  that  where  the  entire  people  are  engaged 
in  satisfying  their  own  wants,  they  will  be  more  gen- 
erally satisfied  than  where  the  majority  are  laboring 
to  provide  something  to  satisfy  the  wants  of  the  few. 

The  direction  of  labor  is  usually  determined  by  the 
employer,  rather  than  by  the  laborer.  The  control  by 
the  great  captains  of  industry  probably  brings  about 
far  greater  results  than  could  be  attained  if  the  direc- 
tion of  labor  were  in  the  hands  of  the  laborers.  The 
employers  are  governed,  not  by  the  thought  of  satisfy- 
ing the  wants  of  as  many  people  as  possible,  but  of 
providing  what  the  people  will  pay  most  for ;  and 
where  there  is  great  wealth  in  the  hands  of  a  few  who 
are  willing  to  expend  it  for  their  personal  pleasure,, 
these  directors  of  labor  will  be  sure  to  turn  it  to  the 
satisfaction  of  their  wants,  rather  than  to  the  wants  of 
the  people  who  have  nothing  to  pay  with. 

It  is  true  that  various  motives  besides  profit  act  to 
induce  one  to  carry  on  business,  and  mistakes  are  fre- 
quently made ;  but  on  the  whole,  the  tendency  is- 


WHAT    SHALL    BE    PEODUCED.  259 

to  produce  what  the  people  want  most,  in  proportion 
as  they  have  the  means  to  purchase  it.  Let  there  be  a 
widespread  desire  on  the  part  of  the  common  laborers 
of  the  country  for  any  article  for  which  they  are  will- 
ing to  exchange  labor,  and  it  is  sure  to  be  produced. 
The  desires  of  the  people,  in  a  general  way,  settle  what 
shall  be  produced  by  the  labor  of  the  country.  The 
laborer  can  have  bread,  beer  or  clothing  produced  for 
him,  just  as  he  pleases. 

If  we  could  control  the  wants  of  the  people,  we  could 
•determine  what  should  be  produced.  If  the  desire  for 
beer  and  whisky  could  be  eliminated,  the  production 
of  these  liquors  would  cease ;  the  gram  would  be  used 
for  food,  and  the  labor  of  all  the  men  in  distilleries, 
wholesale  liquor  stores  and  saloons  would  be  turned 
to  the  satisfaction  of  other  wants. 

Let  us  suppose  a  man  with  an  income  of  a  million 
-dollars  a  year.  This  is  equal  to  commanding  the  labor 
of  more  than  a  thousand  men,  including  superintend- 
ents. The  way  in  which  he  uses  his  income  decides 
the  direction  the  labor  of  these  men  will  take.  If  he 
decides  to  spend  it  all  in  building  another  railroad, 
there  will  be  a  demand  for  railroad  laborers.  Sup- 
pose he  determines  to  spend  all  his  income  on  himself 
and  family.  A  thousand  men  must  now  work  for  him 
in  some  way,  and  he  will  determine  how.  He  will 
likely  take  a  considerable  number  of  them  for  his  ser- 
vants. If  he  drink  costly  wines,  he  will  turn  labor  to 
their  production.  If  he  lives  in  Europe,  such  goods 
as  the  people  of  Europe  most  need  will  be  sent  over 
to  pay  the  bills  of  exchange  he  draws.  His  manner 


260  ECONOMICAL    USE    OF    THE   RESOURCES. 

of  life  in  Europe  will  determine  the  direction  of  labor 
there.  If  he  maintain  as  many  servants  as  an  En- 
glishman of  equal  income,  he  turns  more  labor  into* 
personal  service.  If  he  loses  his  money  on  horse- 
races, he  increases  the  class  of  gamblers.  If  he  gives- 
his  money  to  a  work  like  that  of  General  Booth,  he 
sets  idle  men  and  semi-criminals  to  producing  food, 
clothing  and  shelter  for  themselves.  Whatever  he 
does,  whether  commendable  or  otherwise,  decides  what 
a  thousand  men  shall  do — decides  what  shall  be  pro- 
duced, what  direction  labor  shall  take. 

What  this  man  with  his  income  of  a  million  dollars- 
a  year  does  on  a  large  scale,  other  men  do  on  a  smaller 
scale.  Every  man  thus  has  an  influence  in  directing 
the  labor  of  the  world  to  honorable  or  dishonorable 
employments,  to  pleasant  or  disagreeable  work,  to  in- 
dependent production  or  to  menial  service,  or  to  the 
education  and  intellectual  culture  of  the  age.  If  he 
chooses  to  keep  servants  to  the  number  of  many 
Southern  households  in  the  days  before  the  war,  with 
no  better  appliances  than  of  that  time,  he  puts  more 
people  into  personal  service ;  if  he  adopts  all  the 
modern  appliances  of  housekeeping,  he  sends  more 
men  to  manufacturing.  The  whisky  drinker  puts 
men  to  producing  whisky ;  the  smoker  is  the  man 
who  directs  others  to  make  cigars.  These  things  are 
produced  for  one  more  promptly  than  if  he  ordered 
his  slaves  to  make  them. 

1.  The  Use  of  Labor  in  Satisfying  Wants  Di- 
rectly. —  A  very  large  portion  of  all  the  labor  of 
the  nation  must  be  expended  in  satisfying  wants  di- 


WHAT    SHALL    BE   PKODUCED.  261 

rectly,  without  the  intervention  of  any  material  pro- 
duction. The  United  States  census  reports  show  that 
about  one-fourth  of  those  reported  as  having  any  em- 
ployment are  engaged  in  professional  and  personal 
services.  When  we  add  to  this  the, labor  of  wives  en- 
gaged in  household  duties  and  the  care  of  the  family, 
which  labor  is  not  reported  in  the  census,  we  see  that 
nearly  one-half  of  all  the  labor  of  the  nation  is  ex- 
pended in  satisfying  wants  directly. 

2.  The  Production  of  Consumable  Goods  to 
Satisfy  Wants. — Next  to  satisfying  wants  by  labor 
directly,  comes  the  producing  of  something  that  will 
satisfy  wants.  The  savage  lives  largely  on  the  Re- 
sources of  Nature ;  civilized  man  produces  goods. 
For  the  production  of  most  goods  considerable  time 
is  required  ;  usually  from  one  to  two  years  elapses 
from  the  beginning  of  the  process  of  production  from 
the  soil  to  the  completion  of  the  finished  product.  A 
considerable  store  of  consumable  goods  is,  therefore, 
necessary.  We  eat  last  year's  wheat ;  and  in  the 
winter  wear  clothing  made  in  the  factories  the  summer 
before  ;  the  material  for  the  clothing  was  probably 
produced  more  than  a  year  before  it  was  manufac- 
tured. Labor  is,  therefore,  directed  not  so  much  to 
producing  something  for  immediate  consumption,  as  to 
replacing  the  great  stock  of  consumable  wealth  as  fast 
as  it  is  consumed.  If  we  are  able  to  increase  this 
stock  faster  than  population  increases,  there  is  oppor- 
tunity for  the  better  satisfaction  of  wants  in  the 
future. 

The   quantity   of    Consumable    Produced   Wealth 


262  ECONOMICAL    USE    OF    THE    RESOURCES. 

which  it  is  profitable  to  accumulate  is  decidedly 
limited.  The  storage  of  grain  costs  something.  It 
is  much  better  to  have  good  wheat  land,  and  skilled 
farmers  able  to  produce  wheat  year  by  year  as  needed, 
than  to  have  a  great  store.  Only  a  prophetic  knowl- 
edge of  the  future,  such  as  Joseph  had,  would  justify 
the  accumulation  of  a  seven  years'  supply.  Many 
varieties  of  food  products  must  be  produced  year  by 
year,  because  they  are  of  a  perishable  nature.  Even 
clothing  depreciates  in  utility  through  a  change  of 
fashions,  and  it  is  far  better  that  the  production  of 
each  year  be  worked  off  as  closely  as  possible.  The 
preservation  and  storage  of  all  goods  is  costly.  Better 
far  are  factories,  and  skilled  workmen  able  to  make 
the  clothing  year  by  year,  as  it  is  needed  by  the  peo- 
ple. We  need,  therefore,  only  a  limited  stock  of  Co*n- 
sumable  Produced  Wealth ;  just  enough  to  last  until 
more  can  be  produced,  and  to  tide  over  any  possible 
failure  in  production. 

Hence,  if  we  are  able  to  direct  a  larger  portion  of 
the  labor  of  a  nation  to  the  production  of  consuma- 
ble goods,  it  will  result  in  the  better  satisfaction  of  im- 
mediate wants.  The  effect  of  such  increased  produc- 
tion might  at  first  be  to  increase  slightly  the  stocks  on 
hand,  but  this  increase  would  soon  result  in  greater 
consumption  of  these  goods  by  the  people.  We  draw 
as  much  out  of  our  reservoir  as  we  put  in. 

3.  Accumulation  of  Permanent  Wealth  which 
Satisfies  Wants  Directly. — By  far  the  larger  part  of 
this  form  of  wealth  is  in  dwellings  and  public  build- 
ings. At  first,  the  man  in  the  new  country  must  live 


WHAT    SHALL    BE   PRODUCED.  263 

in  a  "  dug-out,"  a  cave  dug  in  the  hillside  which  he 
can  fashion  in  a  few  days,  or  in  a 'log  house  which 
his  neighbors  help  him  to  build  in  a  not  much  longer 
period.  Neither  of  these  shelters  is  very  permanent, 
though  the  log  house  may  be  an  excellent  dwelling  for 
several  years.  If  one  is  able  to  erect  a  substantial 
stone  house,  it  may  afford  a  dwelling-place  for  him  and 
his  children  after  him,  perhaps  for  centuries.  A  well- 
built  house,  the  modern  improvements,  the  water  and 
gas  fixtures,  the  sewerage,  the  finish,  all  go  to  satisfy 
wants  better,  not  for  the  present  alone,  but  for  a  life- 
time. If  one  were  compelled  to  build  a  house  every 
year,  it  would  necessarily  be  a  cheap  affair ;  because  it 
is  permanent,  one  can  afford  to  give  the  work  of  years 
to  its  completion. 

Public  buildings  come  in  the  same  class  as  houses. 
They  satisfy  the  wants  of  officials,  and  those  of  the 
people  for  the  means  of  government,  and  their  archi- 
tectural appearance  is  a  satisfaction  of  esthetic  wants. 
Church  buildings  and  schoolhouses  belong  in  the  same 
category.  The  school  buildings  satisfy  wants  directly 
as  well  as  the  teacher.  When  we  have  added  to 
buildings  for  the  purposes  named  above,  works  of  art, 
we  have  included  most  of  the  Permanent  Produced 
Wealth  which  satisfies  wants  directly. 

How  much  of  this  class  of  wealth  will  be  pro- 
duced ?  How  much  can  be  advantageously  produced, 
provided  the  labor  can  be  spared?  Ordinarily  one 
house  is  sufficient  for  a  single  family.  Only  a  few 
desire  two  or  three.  It  is  the  demand  for  better 
dwellings  that  requires  so  much  of  the  spare  labor  of 


264          ECONOMICAL    USE   OF   THE   RESOURCES. 

the  nation.  Poor  buildings  are  constantly  being  torn 
down  to  make  room  for  good  ones.  To  provide  for  all 
the  people  as  good  quarters  as  they  would  take  care 
of,  would  require  far  more  labor  than  to  produce  the 
necessary  reserve  supply  of  food  and  clothing.  We 
hope  for  progress  in  erecting  better  dwellings,  with 
sanitary  surroundings.  But  such  buildings  are  of  ad- 
vantage only  so  fast  as  the  people  learn  to  use  and 
care  for  them.  One  of  the  difficulties  found  by  phil- 
anthropic people  of  wealth  in  large  cities,  is  in  secur- 
ing tenants  who  are  fit  to  use  the  buildings.  The  ten- 
ants seem  to  prefer  the  squalor  of  the  old,  filthy  tene- 
ment houses,  and  if  left  to  themselves  soon  reduce  the 
new  to  the  condition  of  the  old.  A  wigwam  is  good 
enough  for  an  Indian,  as  an  Indian ;  if  he  becomes 
civilized,  he  needs  a  better  home. 

The  proportion  of  the  labor  of  the  country  which 
will  be  expended  in  the  production  of  Permanent 
Wealth  which  satisfies  wants  directly,  will  depend 
on  how  much  can  be  spared  from  the  present  support 
of  the  people  in  the  way  they  think  necessary  to  live. 

4.  Permanent  Wealth  which  Satisfies  Wants  In- 
directly.— The  types  of  this  are  machinery,  buildings 
for  manufacturing  and  commercial  purposes,  roads  and 
other  equipments,  and  vessels  for  navigation.  Labor 
will  usually  be  taken  from  other  purposes  for  the  pro- 
duction of  machinery  whenever  the  latter  is  found  to- 
be  profitable.  Machinery  which  a  few  men  can  make 
in  a  year  may  enable  ten  men  thereafter  to  do  the 
work  of  a  thousand. 

Is  there  any  limit  to  the  profitable  production  of 


WHAT    SftALL    BE   PRODUCED.  265 

machinery  ?  It  is  evident  that  we  may  have  all  the 
machinery  that  the  laborers  can  use.  The  farmer 
needs  only  a  certain  number  of  plows ;  one  mowing- 
machine  for  a  small  farm  is  as  good  as  a  dozen.  One 
sewing-machine  in  each  family  is  usually  all  that  is 
needed.  Only  about  so  much  cotton  cloth  would  be 
used  in  the  United  States  if  people  had  all  they  de- 
sired ;  and  there  are  probably  cotton  mills  enough  in 
the  country,  by  running  full  tune,  to  produce  that 
quantity.  There  is  certainly  a  limit  to  the  number  of 
machines  of  any  one  class  which  it  is  worth  while  to 
build. 

Wants,  however,  develop  very  rapidly  when  there  is 
opportunity.  Machines  are  continually  invented  which 
will  produce  something  for  which  a  new  want  can  be 
created,  or  something  that  will  satisfy  wants  at  a  cost 
which  can  be  afforded  by  a  greater  number  of  people. 
There  is  certainly  a  limit  to  the  machinery  that  can 
profitably  be  provided  for  any  given  population,  but 
the  limit  is  far  beyond  us. 

The  building  of  roads,  railroads  and  canals  has 
in  the  United  States  required  a  large  portion  of  the 
labor  which  could  be  spared  from  the  satisfaction  of 
immediate  wants.  This  class  of  Produced  Wealth 
follows  the  same  law  as  machinery.  It  is  sometimes 
said  that  capital  is  sunk  in  railroads  ;  what  is  sunk  is 
labor,  labor  which  might  have  been  unemployed,  or 
employed  in  the  satisfaction  of  present  wants. 

A  certain  amount  of  labor  is  devoted  to  improve- 
ments on  land,  which  yield  their  return  in  the  future. 
If  the  farmer  can  spare  time  from  making  a  living  for 


I 

266  ECONOMICAL    USE    OF    THE    EESOURCES. 

Ms  family,  or  can  put  in  a  little  extra  labor  in  the 
-course  of  a  year,  he  may  drain  a  swamp  which  will 
-hereafter  be  the  best  land  he  has.  This  is  labor  de- 
voted to  accumulation  as  much  as  in  the  production 
of  machinery. 

Under  the  last  division  we  have  enumerated  the 
principal  classes  of  Permanent  Produced  Wealth 
which  satisfy  wants  indirectly.  They  are  the  forms 
T}y  means  of  which  the  vast  accumulations  of  wealth 
in  modern  times  have  been  rendered  possible.  For 
what  purposes  could  labor  be  used  in  ancient  times  be- 
yond the  satisfaction  of  present  wants  ?  We  have 
seen  there  is  nothing  to  be  gained  by  the  storing  up 
food  and  clothing,  and  other  Consumable  Wealth,  be- 
yond a  supply  for  a  year  or  two.  Without  machinery, 
and  modern  railroads  and  modern  ships,  little  re- 
mained but  buildings.  Great  castles  were  erected, 
but  there  were  no  forms  of  wealth  known  in  which  it 
was  possible  to  store  up  the  labor  of  the  present  for 
the  future,  to  the  extent  it  is  done  at  the  present. 
People  worked  hard  enough.  Slaves  built  the  great 
pyramids  of  Egypt,  a  useless  toil  of  thousands  of  men 
for  weary  years.  Could  the  same  labor  have  been 
used  in  the  construction  of  modern  machinery,  the  pro- 
duction of  the  future  could  have  been  greatly  in- 
creased. The  few  persons  in  control,  however,  cared 
nothing  for  the  wants  of  the  people,  even  if  they  had 
been  able  to  produce  modern  machinery. 

All  the  labor  expended  in  satisfying  wants  directly 
goes,  of  course,  to  the  satisfaction  of  immediate  wants, 


WHAT    SHALL    BE   PRODUCED.  26 T 

and  nothing  is  accumulated ;  although  the  condition  of 
the  people  may  be  greatly  improved  by  education. 

Future  accumulations  of  Produced  Wealth  will  be 
in  the  form  of  Permanent  Wealth,  both  that  which 
satisfies  wants  directly — such  as  dwellings,  public 
buildings,  parks,  works  of  art,  etc. — and  that  which 
satisfies  wants  indirectly — such  as  tools  and  machin- 
ery, roads  and  facilities  for  communication  and  trans- 
portation, improvements  on  land,  etc.  Even  now  we 
are  talking  of  expending  a  hundred  million  dollars  in 
building  the  Nicaragua  canal.  Such  an  expenditure 
is  equal  to  the  labor  of  an  army  of  two  hundred  thou- 
sand men  for  a  year,  either  on  the  ground  or  some- 
where else. 

To  one  who  has  the  welfare  of  the  race  at  heart,  the 
question  arises  whether  we  have  not  reached  the  point 
where  it  were  better  to  turn  more  labor  to  the  satisfac- 
tion of  immediate  wants.  The  erection  of  dwellings 
provides  for  immediate  needs  and  also  for  wants  in  the 
future.  It  is  doubtful  if  there  is  any  real  need  of  a 
rapid  addition  to  the  present  stock  of  the  machinery 
of  the  world's  production.  There  is  need  of  a  much 
better  provision  for  the  wants  of  the  great  mass  of  the 
people  at  the  present  time.  The  philanthropist  would 
probably  desire  to  turn  surplus  labor,  for  the  next  few 
years  at  least,  to  the  more  comfortable  housing  of  all 
the  people.  Such  housing,  especially  in  cities,  neces- 
sarily includes  water  supply,  sewerage,  and  many  sani- 
tary arrangements.  He  would  also  direct  effort  to  the 
securing  of  pure  and  wholesome  food  ;  which  even  the 
rich  find  it  difficult  to  procure.  He  would  relieve 


268          ECONOMICAL    USE   OF   THE   RESOURCES. 

children  and  persons  under  sixteen  or  eighteen  years 
of  age  from  labor  outside  the  family  to  which  they 
belong ;  and  would  turn  more  labor  to  the  satis- 
faction of  wants  directly,  in  the  teaching  of  these 
young  people  in  the  schools,  so  as  to  better  fit  them 
for  life.  If  this,  and  other  labor  for  the  immediate 
wants  of  each  year,  prevented  the  rapid  increase  of 
wealth,  he  would  not  greatly  regret  it,  believing  that 
there  is  so  much  Produced  Wealth  that  its  increase, 
except  in  the  case  of  dwellings,  is  of  much  less  impor- 
tance than  formerly. 


BOOK  V. 

EXCHANGE. 


BOOK  V. 

EXCHANGE. 

CHAPTER        I.     How  EXCHANGE  SATISFIES  WANTS,  .     .  271 

CHAPTER       II.     THE  PRICE  OF  A  DOLLAR,       ....  275 

CHAPTER     III.     EXCHANGE  VALUES, 280- 

CHAPTER      IV.     THE    LIMITS   OF  VALUE  IN    EXCHANGE 

ARE  FIXED  BY  VALUES  IN  USE,  .    .  285 

CHAPTER       V.     SUPPLY  AND  DEMAND, 289- 

CHAPTER     VI.     COST  OF  PRODUCTION, 296 

CHAPTER    VII.     MONOPOLY, .     .     .     .  306- 

CHAPTER  VIII.     MONEY, 312 

PART        I.     Qualities  of  a  Good  Money,  .     .'.     .     .  313 

PART      II.     What  Determines  the  Value  of  Money  ?  325 
PART     III.     Efforts  to  Secure  a  Money  of  Uniform 

Value, 330 

• 

CHAPTER     IX.     SUBSTITUTES  FOR  MONEY, 335 


BOOK  V. 

EXCHANGE. 

CHAPTER  I. 

HOW  EXCHANGES  SATISFY  WANTS. 

Extended  division  of  labor  is  possible  only  by 
means  of  Exchange.  Where  one  man  devotes  him- 
self to  one  thing  he  produces  a  great  deal  more  of  it 
than  his  family  can  use,  and  he  lacks  the  thousand 
other  things  they  need.  Each  one  exchanges  his  per- 
sonal service,  or  the  goods  he  produces,  for  other 
things  which  he  desires.  Exchange  makes  possible  a 
division  of  labor,  not  only  between  individuals,  but 
also  between  nations. 

The  cost  of  Exchange  is  sometimes  greater  than  the 
cost  of  production  ;  that  is,  it  frequently  costs  more  to 
sell  goods  than  to  make  them.  The  problem  is  not 
merely  one  of  transportation.  When  people  want  tea, 
grown  in  China,  the  carriage  of  goods  half  round  the 
globe  is  the  simplest  part  of  it.  The  shipload  must 
be  distributed  among  wholesale  merchants,  and  again 
among  retail  merchants,  who  sell  it  to  the  customer  in 
single  pounds.  The  merchants  must  keep  on  hand  a 
stock  of  such  varieties  as  may  be  desired  ;  and  the  la- 
18  (  271 ) 


272  EXCHANGE. 

bor  of  transporting,  testing,  sorting  and  distributing 
is  very  considerable,  to  say  nothing  of  the  capital  em- 
ployed, and  risk  involved.  A  part  of  this  work  re- 
quires the  highest  form  of  skilled  labor,  which  com- 
mands the  highest  price  in  the  market. 

Two  people  can  seldom  meet,  and  exchange  their 
products  directly ;  when  they  do,  the  seller  sometimes 
finds  more  labor  connected  with  the  selling  of  his  prod- 
uct than  with  its  production.  The  milkman  would 
perhaps  be  glad  to  sell  milk  to  one  purchaser  at  his 
farm  for  two  cents  a  quart ;  he  brings  it  to  the  city, 
takes  it  from  place  to  place,  and  gets  eight  cents  a 
quart.  Three-fourths  of  the  price  is  therefore  pay- 
ment for  the  transportation  and  exchange,  and  only 
one-fourth  for  the  milk.  The  labor  and  cost  of  sell- 
ing the  milk  is  three  times  as  great  as  the  labor  and 
cost  of  its  production.  Of  the  eight  cents  a  quart, 
only  one-fourth  belongs  to  production,  while  three- 
fourths  belong  to  exchange.  If  the  producer  sells  the 
milk  at  his  farm  for  two  cents  a  quart,  to  a  merchant 
who  intends  to  sell  to  consumers  at  eight  cents,  we 
have  precisely  the  same  division  of  the  returns  as  be- 
fore— one-fourth  for  Production,  and  three-fourths  for 
Exchange. 

These  examples  are  simple  wants  ;  more  frequently 
one  does  not  know  what  he  will  need,  nor  have  the 
means  to  purchase,  beforehand.  The  merchant  looks 
the  world  over,  and  sees  what  people  are  producing. 
He  finds  what  the  people  want,  in  every  nation  and 
hamlet  and  farmhouse.  He  purchases  goods,  and  car- 
ries them  to  the  people  who  will  give  the  most  for 


HOW   EXCHANGES   SATISFY   WANTS.  273 

them.  He  thus  encourages  the  production  of  some 
goods  and  discourages  the  production  of  others,  ac- 
cording as  human  wants  fluctuate.  The  capital  re- 
quired for  the  world's  exchange  is  as  great  as  the 
world's  production.  The  number  of  men  employed  is 
less,  but  the  risk  of  loss  is  greater.  Goods  are  in- 
jured, or  depreciate  in  utility.  The  merchant  finds 
himself  mistaken  in  his  opinion  of  what  the  people 
want,  and  must  dispose  of  some  goods  at  a  loss. 

It  has  been  common  to  <?all  it  all  Production,  and  to 
«ay  that  the  merchant  vessel  trading  with  China,  the 
railroad  superintendent  and  the  retail  merchant  are 
all  engaged  in  Production,  since  it  is  just  as  important 
that  goods  be  exchanged  as  that  they  be  produced. 
But  Exchange  is  not  Production,  and  it  confuses  our 
ideas  to  call  it  so.  To  the  interests  engaged  in  Pro- 
duction belong  all  the  goods  they  produce  ;  but  if  they 
exchange  them  themselves  they  must  employ  more  la- 
bor. If  one  man  takes  the  entire  product  of  a  factory, 
he  can  not  give  all  he  expects  to  sell  it  for.  One  has 
a  right  to  what  he  has  produced  ;  he  sells  it  on  the 
best  terms  he  can  for  money  to  buy  other  goods, 
because  he  prefers  exchanging  to  keeping. 

If  it  be  asked,  "  Since  exchanges  cost  so  much,  why 
are  they  made  ?  Why  does  not  every  one  produce  all 
he  wants  himself?"  the  answer  is,  first,  it  would  be 
impossible  ;  and  second,  the  gain  from  the  Division  of 
Labor  is  many  times  the  cost  of  exchange.  Few  peo- 
ple stop  to  think  of  the  great  part  which  Exchange 
plays  in  the  satisfaction  of  wants,  and  how  much  bet- 
ter they  can  be  satisfied  by  its  aid  than  without.  It 


274  EXCHANGE. 

transfers  articles  from  one  to  whom  they  have  little 
Value  in  Use  to  one  to  whom  they  have  a  higher 
value;  it  makes  possible  the  Division  of  Labor. 
Without  Exchange,  only  a  small  fraction  of  the  pres- 
ent population  could  be  sustained,  and  the  wants  of 
these  few  would  be  meagerly  supplied.  We  assume 
its  existence,  like  that  of  the  air  about  us ;  and  all 
production,  and  all  efforts  for  the  satisfaction  of  wants, 
are  made  on  the  assumption  that  exchanges  are  to  con- 
tinue. 


CHAPTER  n. 

THE  PRICE  OF  A  DOLLAR. 

Our  first  object  is  to  ascertain  how  much  of  one 
commodity  will  be  given  for  a  certain  quantity  of  an- 
other. How  much  for  how  much?  It  is  more  im- 
portant that  one  know  this  beforehand  than  that  he 
make  a  good  bargain  when  it  comes  to  a  trade.  Under 
the  division  of  labor  every  man  produces  more  of  some 
one  thing  than  he  can  use  himself,  and  the  excess  is 
worth  to  him  only  what  he  can  get  for  it.  But  he  be- 
lieves he  can  get  about  so  much,  and  produces  his 
goods  with  this  expectation,  perhaps  employing  labor 
for  wages  and  incurring  other  expenses.  If  he  does  not 
get  about  as  much  as  he  expected,  it  means  financial 
ruin.  Most  failures  in  production  come  from  miscal- 
culation as  to  what  the  product  can  be  sold  for.  A 
year  is  required  to  raise  a  crop  on  a  farm,  a  longer 
period  for  some  other  forms  of  production;  and  one 
must  know  what  he  can  get  for  goods,  often  a  year  or 
more  in  advance.  Nothing  will  enable  us  to  predict 
this  with  certainty;  yet  when  the  conditions  are 
fairly  well  known,  we  may  be  able  to  determine  with- 
in certain  limits  what  the  terms  of  exchange  will  be. 

Optimists  sometimes  say  that  every  exchange  is 
beneficial  to  both  parties,  else  it  would  not  be  made. 
Yes  ;  under  the  circumstances.  Anything  one  can  not 
use  is  worth  nothing  to  him  unless  he  can  exchange  it 

(275) 


276  EXCHANGE. 

for  something  lie  can  use.  If  the  farmer  can  never 
get  more  than  five  cents  a  pound  for  the  wool  he "  pro- 
duced last  year,  he  would  better  sell  it.  However,  if  he 
had  known  that  the  price  of  wool  would  be  so  low,  he 
would  not  have  raised  the  sheep.  He  produced  the 
wool  because  he  had  reason  to  believe  that  he  could 
exchange  it  for  a  larger  part  of  the  world's  products. 
A  successful  manipulator  of  the  market  can  gather  to 
himself  a  large  part  of  the  value  of  the  world's  pro- 
duction, by  leading  men  to  suppose  they  can  obtain  a 
certain  price  for  an  article,  and  then  so  changing  the 
conditions  that  they  can  not  get  half  that  price. 
Under  the  circumstances,  it  is  better  for  one  to 
give  up  his  money  to  a  robber.  One  never  makes 
an  exchange  in  which  he  does  not  believe  that  he  is 
benefited,  under  the  circumstances,  but  it  is  unfor- 
tunate that  he  did  not  know  what  the  circumstances 
would  be  before  he  began  the  production  of  the  goods. 
It  is  only  in  the  out-of-the-way  lines  of  production, 
and  under  special  circumstances,  that  individuals  are 
able  to  influence  prices,  for  more  than  a  few  days.  In 
the  ordinary  channels  of  trade,  and  in  the  common  lines 
of  production,  the  terms  of  exchange  are  fixed  by  great 
natural  laws,  easily  understood.  If  the  producer  does 
not  get  as  much  as  he  expected,  it  is  because  he  has 
produced  the  wrong  thing ;  because  production  has  not 
gone  forward  in  the  way  which  is  most  advantageous 
for  the  satisfaction  of  the  world's  wants.  Neverthe- 
less, it  is  just  as  important  that  the  producer  under- 
stand the  laws  of  Exchange,  and  the  principles  which 
govern  the  terms  on  which  exchanges  take  place.  These 


THE    PRICE    OF    A    DOLLAR.  277 

principles  are  equally  important  where  human  effort 
iatisiies  wants  directly,  and  in  exchange  of  the  title  to 
any  Resources  of  Nature. 

Exchange  Value. — The  quantity  of  goods,  or  the 
service,  which  one  will  ordinarily  receive  for  an  article, 
is  called  its  Exchange  Value.  When  one  receives 
money,  the  sum  is  called  price.  Professor  Price,  of 
England,  called  the  goods  which  the  money  buys,  the 
price  of  the  money ;  and  when  lecturing  in  the  United 
States,  nearly  twenty  years  ago,  used  to  ask  the  ques- 
tion :  "If  hats  are  selling  for  four  dollars  apiece,  what 
is  the  price  of  a  dollar  ?  "  Of  course  the  answer  always 
came  promptly  :  "  One-fourth  of  a  hat."  We  have 
been  accustomed  to  say  "  value  of  a  dollar,"  rather  than 
"  price,"  meaning  the  same  thing ;  but  there  are  some 
advantages  in  extending  the  term  "  price "  to  both 
sides  of  the  money  transaction.  The  word  "  value  "  is 
never  quite  as  clear  as  "price,"  because  we  have  a 
value  in  use  as  well  as  in  exchange;  and  only  the 
clearest  thinker  keeps  them  strictly  separate.  The 
term  "  price  "  is  definite ;  and  the  moment  we  get 
used  to  the  strange  sound  of  "  the  price  of  a  dollar," 
we  know  exactly  what  it  means,  and  the  idea  can  not 
be  confused  with  anything  else. 

It  is  evident  that  there  are  as  many  prices  of  a  dol- 
lar as  there  are  goods  or  services  which  it  will  pur- 
chase. If  the  price  of  a  dollar  is  one-fourth  of  a  hat* 
it  is  also  one  bushel  of  wheat,  twenty  pounds  of  iron,, 
two  yards  of  cloth,  twenty  pounds  of  sugar,  and  so  on 
through  the  list  of  everything  which  money  will  buy. 

Sale  and  purchase  are  much  simpler  than  barter. 


278  EXCHANGE. 

At  first  it  would  seem  that  they  require  two  transac- 
tions instead  of  one ;  we  sell  the  goods  for  money, 
and  buy  other  things  with  the  money,  instead  of  trad- 
ing goods  directly  for  goods.  But  we  seldom  wish  to 
make  such  direct  trades.  The  producer  wishes  to  dis- 
pose of  all  his  product,  and  to  get  a  great  variety  of 
goods  in  exchange  for  it.  We  want  a  little  of  a  great 
many  things  ;  and  if  we  attempted  to  estimate  the 
value  of  every  article  in  terms  of  every  other  article, 
the  task  would  be  endless.  It  is  a  great  deal  easier 
to  refer  each  to  a  common  unit.  It  would  be  impos- 
sible to  string  a  wire  from  the  house  of  every  tele- 
phone subscriber  to  that  of  every  other  subscriber. 
To  thus  connect  a  hundred  subscribers  would  require 
4,950  wires ;  but  by  running  all  the  wires  to  a  central 
office,  a  hundred  are  sufficient.  Every  message  goes 
to  the  center,  and  out  from  the  center.  There  are 
more  than  a  thousand  classes  of  goods  to  exchange. 
To  estimate  the  value  of  each  one  of  the  thousand 
in  that  of  all  the  others,  would  require  499,500  cal- 
culations; by  means  of  money  it  requires  only  a 
thousand.  So,  in  seeking  for  the  terms  on  which  ex- 
change will  take  place — how  much  for  how  much — to 
save  the  endless  combinations  we  go  to  a  central  piece 
of  money,  and  from  that  to  every  article  which  is 
desired  in  exchange.  Take  the  product  of  a  shoe 
factory.  How  much  can  the  owners  get  for  it  in  the 
things  they  want  ?  First,  how  much  money  can  they 
get  for  the  shoes  ?  This  is  only  half  the  answer,  for 
they  can  not  eat  the  money.  Second,  what  are  the 
prices  of  a  dollar?  How  much  will  a  dollar  buy? 


THE    PRICE    OF    A    DOLLAR.  279 

How  much  flour?  how  much  clothing?  how  many 
school  books?  and  so  on,  to  the  end  of  hundreds  of 
questions.  When  we  know  the  price  of  the  product 
of  the  shoe  factory,  and  the  prices  of  a  dollar,  we 
can  tell  how  much  the  producers  will  receive.  We 
must  know  how  many  dollars  they  can  get  for  what 
they  have  to  sell,  and  what  they  can  buy  with  a  dollar. 
In  endeavoring  to  ascertain  the  terms  on  which  ex- 
changes will  take  place — how  much  will  be  given  for 
how  much — we  shall  assume  the  exchanges  to  be  made 
by  means  of  money,  because  it  is  so  much  simpler  than 
barter.  Frequently  we  shall  notice  only  the  price  of 
the  goods — how  much  money  one  can  get  for  an 
article  ;  but  we  must  always  remember  that  the  price 
of  a  dollar  is  equally  important — that  is,  the  quantity 
of  goods  one  can  get  for  the  dollar. 


CHAPTER  III. 

EXCHANGE  VALUES. 

An  Exchange  Value  of  any  article  is  what  one  can 
get  for  it  in  the  open  market.  It  must  be  carefully 
distinguished  from  Value  in  Use.  Value  in  Use  is. 
what  a  thing  is  worth  to  use  ;  Value  in  Exchange  is 
what  it  is  worth  to  sell.  The  two  have  some  relation, 
but  are  often  far  apart.  In  fact,  Exchange  Value  is 
likely  to  lie  between  the  different  Values  in  Use  to 
different  persons.  An  elephant  would  have  no  Value 
in  Use  to  most  people.  His  Exchange  Value  is  what 
a  showman  or  park  commissioner  would  give  for  him. 
It  is  sometimes  said  that  a  thing  is  worth  only  what  it 
will  sell  for.  If  by  this  we  mean  its  Exchange  Value 
is  what  it  will  sell  for,  we  are  only  stating  the  same 
thing  in  different  language  ;  but  if  we  mean  that  its 
Value  in  Use  is  only  what  it  will  sell  for,  the  state- 
ment is  wholly  untrue.  Value  in  Use  may  be  a  great 
deal  more,  or  a  great  deal  less,  than  the  Value  in  Ex- 
change. As  has  been  said  before,  the  first  object  of 
this  book  is  to  find  the  terms  on  which  exchanges  will 
be  made.  Exchange  Value  is  only  a  shorter  name  for 
"  the  terms  on  which  exchange  will  be  made."  We 
are  to  rid  ourselves  of  all  ideas  as  to  whether  ex- 
changes are  rightfully  or  wrongfully  made,  and  of  all 
extraneous  circumstances,  and  remember  that  Ex- 
change Value  is  independent  of  all  moral  qualities- 

(280) 


EXCHANGE    VALUES.  28 1 

It  is  simply  what  the  article  can  be  exchanged  for,  in 
the  market. 

There  will  be  as  many  Exchange  Values  as  there 
are  articles  for  which  a  commodity  can  be  exchanged. 
A  country  shoemaker  may  be  able  to  trade  a  pair  of 
boots  for  a  cord  of  wood,  four  bushels  of  wheat,  one- 
half  ton  of  hay,  or  for  certain  quantities  of  various 
other  commodities.  The  Exchange  Values  of  the  boots 
are  the  cord  of  wood,  four  bushels  of  wheat,  half  a 
ton  of  hay,  or  whatever  quantity  of  any  other  article 
the  shoemaker  can  get  for  his  goods.  It  would  be 
easy  to  compute  the  Exchange  Values  of  a  bushel  of 
wheat  in  a  thousand  articles,  so  that  it  will  have  a 
thousand  different  Exchange  Values. 

Price  is  the  Exchange  Value  of  anything  in  money, 
and  is  therefore  simply  one  of  the  numerous  Exchange 
Values  which  every  article  has.  For  convenience  it  is 
usually  the  only  one  taken  account  of.  When  we  say, 
"  the  value  of  an  article,"  we  usually  think  of  its  value 
in  money,  which  is  its  price.  The  real  values,  how- 
ever, to  the  seller  are  the  values  estimated  in  the  goods 
which  he  wishes  to  purchase.  The  farmer  has  his 
wheat  crop  and  desires  to  use  it  to  purchase  goods  for 
himself  and  family.  What  he  really  wants  is  these 
goods — groceries,  dry  goods,  clothing,  musical  instru- 
ments, farm  machinery,  and  many  other  things.  In- 
stead of  estimating  the  value  of  his  wheat  in  these 
goods,  he  is  anxious  about  the  price,  or  the  value  in 
money.  He  is  likely  to  forget  the  values,  or  the 
prices,  of  a  dollar,  and  thinks  he  gets  a  high  or  low 
value  for  his  wheat  according  as  the  price  is  high  or 


282  EXCHANGE. 

low.  An  economist  looks  beyond  this.  He  sees  the 
values  of  a  dollar,  and  estimates  the  quantities  of  the 
goods  which  the  farmer  can  get  in  exchange  for  his 
wheat  crop.  If  these  are  more  this  year  than  last,  the 
values  of  his  wheat  are  higher. 

The  same  is  true  of  labor.  Many  men  have  noth- 
ing to  sell  but  their  labor  power.  What  they  really 
want  in  exchange  for  labor  is  their  house  rent,  food 
and  clothing  for  themselves  and  family,  and  numerous 
comforts  and  luxuries  of  life.  The  laborer  exchanges 
his  labor  for  money,  and  the  money  received  is  the 
money  value,  or  price*  of  his  labor.  But  this  is  only 
half  the  exchange.  He  now  has  to  buy  goods  with 
the  money,  and  the  values  of  the  money  in  the  thou- 
sand different  articles  he  wants — that  is,  the  thousand 
different  prices  of  a  dollar — are  what  he  wants  to 
know.  The  only  way  to  ascertain  whether  the  real 
values  of  a  commodity  have  risen  or  fallen  is  to  make  a 
computation  of  the  quantities  of  different  goods  which 
it  will  buy,  in  the  proportion  in  which  the  purchaser 
desires  to  get  them.  It  is  seldom  that  the  value  of 
any  article  continues  the  same  for  any  length  of  time, 
but  it  is  easy  to  estimate  how  much  of,  say,  a  hundred 
staple  articles,  a  bushel  of  wheat  will  buy ;  and  to 
compare  these  quantities  with  what  it  would  have 
bought  one,  two,  three,  or  four  years  ago.  We  thus 
ascertain  whether  the  value  of  wheat  has  risen  or 
fallen.  The  simplest  way  to  make  a  computation  is 
to  take  the  prices  of  each  of  the  articles,  at  the  dif- 
ferent dates,  then  to  ascertain  how  much  of  each  the 
price  of  a  bushel  of  wheat  would  buy  on  each  day 


EXCHANGE   VALUES.  283 

specified.  We  can  thus  ascertain  whether  the  bushel 
of  wheat  has  risen  or  fallen  in  values'  as  estimated  in 
the  goods  which  the  farmer  wishes  to  purchase. 

It  is  in  this  way  that  we  can  ascertain  the  changes 
in  the  values  of  money.  The  average  value  of  money 
is  very  different  to  different  people,  depending  on  what 
they  wish  to  buy.  The  common  laborer,  whose  wages 
will  not  be  much  more  than  a  dollar  per  day  in  a  town 
of  moderate  size,  will  be  somewhat  limited  in  the  range 
of  his  purchases.  After  paying  house  rent,  purchas- 
ing food  and  clothing  for  himself  and  family,  school 
books  for  his  children,  etc.,  there  will  not  be  much 
left  for  a  wide  range  of  luxuries.  The  values  of  the 
dollar  to  him  must  be  estimated  in  the  things  which 
he  is  likely  to  purchase.  A  man  with  an  income  of 
five  thousand  dollars  per  year  will  be  apt  to  purchase 
a  greater  variety  of  goods ;  and  his  values  of  a  dollar 
will  be  estimated  in  a  somewhat  different  and  greater 
variety  of  objects.  The  values  of  a  dollar  can  be  got 
at  only  by  a  somewhat  general  average  of  wants  of 
the  whole  people;  and  we  come  nearest  to  the  true 
average  value  of  a  dollar  by  selecting  a  considerable 
number,  at  least  a  hundred,  staple  commodities  in 
general  use ;  and  taking  them  in  the  proportions  in 
which  they  are  called  for  in  the  markets  of  the  nation. 
By  selecting  a  hundred  such  articles,  and  taking  a 
proper  proportion  of  each,  we  are  enabled  to  say 
whether  the  average  value  of  a  dollar  is  greater  or 
less  this  year  than  last,  and  to  what  extent  it  has 
changed.  Such  estimates  always  show  very  consider- 
able variation  in  the  values  of  money,  which  is  far 


284  EXCHANGE. 

from  being  the  unvarying  standard  that  is  popularly 
supposed. 

One  should  become  accustomed  to  estimating  the 
value  of  his  labor,  and  of  the  commodity  he  has  to 
sell,  in  all  the.  objects  which  he  proposes  to  buy — not 
in  money  alone,  but  in  the  articles  for  which  he  wishes 
finally  to  exchange  it. 

It  is  to  be  understood  that  Exchange  Values  are  not 
the  cost  of  the  production  ;  are  not  the  labor  involved  in 
production ;  are  nothing  but  the  things  which  one  can 
get  in  exchange  for  what  he  has  to  sell.  The  cost  of 
production,  or  the  labor  involved,  is  often  the  cause  of 
value,  and  sometimes  determines  what  the  value  will 
be,  as  we  shall  see  hereafter.  But  it  is  not  the  value, 
which  may  depend  upon  a  combination  of  many  causes. 

Exchange  Value,  as  we  shall  see  hereafter,  has  also 
a  relation  to  Value  in  Use,  but  it  is  not  Value  in  Use, 
and  when  we  are  estimating  or  thinking  of  Exchange 
Value  we  are  to  think  simply  of  the  price  of  an 
article  in  money,  or  of  the  goods  that  can  be  had  for 
it  in  trade.  This  much  is  necessary  to  fix  the  idea  of 
Exchange  Value  in  our  minds  before  proceeding  to  in- 
quire what  determines  it,  or  what  determines  the  terms 
on  which  one  article  will  be  exchanged  for  others. 

The  reader  is  urged  not  to  leave  this  chapter  with- 
out a  clear  idea  that  it  is  not  value,  but  values,  that 
we  are  seeking  to  ascertain.  One  value  of  an  article 
may  be  of  little  consequence.  It  has  a  thousand 
values,  and  each  one  wishes  to  know  the  values  in  the 
goods  he  expects  finally  to  get.  The  advantage  of 
knowing  the  money  value  is  in  the  facility  with  which 
all  other  values  are  deduced  from  it. 


CHAPTER  IV. 

THE  LIMITS  OF  VALUES  IN  EXCHANGE  AEE  FIXED 
BY  VALUES  IN  USE. 

We  now  come  to  the  question,  On  what  terms  will 
exchange  be  made  ?  How  much  of  one  article  will  be 
given  for  another  ?  The  popular  statement  that  every 
exchange  is  an  advantage  to  the  parties,  is  true  if  we 
add  "  under  the  circumstances  in  which  it  is  made  "; 
that  is,  no  man  will  make  a  trade  unless  he  thinks  it 
best  for  him  to  make  it,  as  he  is  situated,  although 
the  other  party  may  be  responsible  for  the  situation. 
This  simply  means  that  one  will  not  give  more  or 
"take  any  less  for  any  article  than  what  he  supposes  to 
be  its  Value  in  Use  to  himself.  But  the  Value  in  Use 
is  very  different  to  different  individuals.  The  Value 
in  Use  of  the  elephant  to  its  owner  may  be  nothing. 
He  has  no  use  for  him ;  he  can  not  afford  to  feed  him ; 
he  would  better  give  him  away  than  keep  him.  Conse- 
quently, if  he  gets  one  dollar  in  exchange  for  him,  he 
has  gained  the  dollar.  On  the  other  hand,  the  Value 
in  Use  to  the  showman  may  be  several  thousand  dol- 
lars. He  will  not  give  more  than  this.  If  he  gets 
him  for  less,  he  gains  so  much. 

Let  us  suppose  the  Value  in  Use  of  the  elephant  to 
the  showman  to  be  one  thousand  dollars ;  to  the  owner, 
nothing.  The  margin  here  is  one  thousand  dollars, 
which  will  be  gained  by  one  party  hi  the  trade,  or  di- 

(285) 


286  EXCHANGEE. 

vided  between  both.  The  limits  of  the  exchange  are 
therefore  the  Value  in  Use  to  the  owner  and  the  Value 
in  Use  to  the  showman.  We  have  not  stopped  to  in- 
quire how  the  owner  got  the  elephant.  He  may  have 
imported  him  at  a  cost  of  nine  hundred  dollars,  under 
the  belief  that  he  could  sell  him  to  the  showman  for 
one  thousand  dollars.  If  he  can  not  get  the  nine 
hundred,  of  course  he  meets  with  a  loss.  But  the  loss 
has  already  been  incurred.  The  labor  and  the  capital 
have  been  sunk,  and  the  elephant  is  worth  nothing  to 
him  unless  he  can  sell  him.  If  he  has  only  one  show- 
man to  deal  with,  he  may  be  compelled  to  take  much 
less  than  the  beast  cost  him.  On  the  other  hand,  if 
there  is  no  other  elephant  for  sale,  and  the  owner  be 
firm,  he  may  compel  the  showman  to  pay  his  full  Value 
in  Use,  or  one  thousand  dollars.  If  there  are  only 
two  parties  to  this  transaction, — no  other  elephant  in 
in  the  market,  no  other  showman  desiring  to  pur- 
chase— one  can  not  predict  the  price  beforehand,  ex- 
cept to  say  that  it  will  be  between  nothing  and  one 
thousand  dollars.  It  will  depend  partly  on  the  firm- 
ness of  each,  or  the  knowledge  which  each  has  of  the 
other's  condition,  and  upon  mental  traits  and  accidents 
which  would  not  be  the  same  with  any  two  parties. 

Let  us  fix,  then,  in  our  minds  ;  first,  this  principle,, 
that  all  exchanges  are  limited  by  the  Value  in  Use 
to  each  party ;  but  the  limits  are  often  far  apart,  and 
may  mean  wealth  or  poverty  to  either  party.  Often 
there  is  an  element  of  justice,  and  one  can  say  that 
the  price  ought  to  be  so  and  so,  but  this  will  not  de- 
termine what  the  price  will  be. 


LIMITS    OF   VALUES.  287 

COMPETITION. — Let  us  suppose  there  are  two  show- 
men and  one  elephant.  It  is  not  likely  that  its  Value 
in  Use  will  be  the  same  to  both.  It  will,  perhaps,  be 
a  thousand  dollars  to  one  showman  and  fifteen  hun- 
dred to  the  other.  Now,  how  much  will  the  elephant 
bring?  If  these  men  compete  for  him,  at  least  one 
thousand  dollars,  since  either  would  prefer  giving  that 
to  losing  him.  The  first  bidder  will  give  the  thousand 
rather  than  to  have  the  other  get  the  animal  ;  and  the 
second  will  give  a  little  more  than  a  thousand  because 
the  Value  in  Use  to  him  is  fifteen  hundred.  If  the 
full  circumstances  of  the  case  are  known,  the  owner 
will  get  one  thousand  dollars,  or  a  trifle  above  that. 
The  second  purchaser  will  not  give  much  more  than 
one  thousand,  because  he  knows  his  competitor  can  not 
afford  to  give  more,  and  that  the  elephant  is  worth 
nothing  to  its  owner.  If,  however,  competition  is  not 
open  ;  if  the  seller  can  keep  the  second  purchaser  in 
ignorance  of  the  condition  of  the  first,  and  lead  him  to 
believe  that  the  first  purchaser  would  give  fifteen  hun- 
dred, he  can  obtain  something  near  that  price,  because 
the  second  is  willing  to  give  that,  if  he  can  not  get 
the  beast  for  less.  Open  competition,  where  all  cir- 
cumstances are  known,  simply  narrows  the  limits  o£ 
Exchange  Value.  In  the  first  case,  we  saw  that  the, 
price  would  be  somewhere  between  nothing  and  a, 
thousand  dollars ;  in  the  second  case,  it  will  be  either- 
one  thousand  or  somewhere  between  one  thousand  and 
fifteen  hundred. 

Let  us  now  suppose  other  purchasers  to  whom  the 
elephant  is  worth  eleven  hundred,  twelve  hundred, 
19 


288  EXCHANGE. 

thirteen  hundred,  and  fourteen  hundred,  respectively. 
The  owner  will  now  obtain  something  between  four- 
teen and  fifteen  hundred  dollars  for  him.  He  is 
worth  fifteen  hundred  to  one  showman  and  fourteen 
hundred  to  another.  Competition  frequently  brings 
the  limits  of  exchange  within  a  few  cents  of  each 
other. 

COMBINATION. — Combination  destroys  competition. 
Let  us  suppose  now  that  all  these  showmen  combine. 
They  say,  "  There  is  only  one  elephant  to  be  had.  He 
is  worth  nothing  to  the  owner,  and  there  is  no  need 
of  giving  more  than  a  hundred  dollars  for  him.  If, 
therefore,  we  agree  that  one  of  our  number  shall  offer 
one  hundred  dollars,  and  the  others  shall  refuse  to 
purchase,  or  offer  less  than  one  hundred,  the  owner 
will  sell  at  that  price,  because  he  will  be  a  hundred 
dollars  better  off  than  to  have  the  animal  left  on  his 
Lands  ;  and  we  can  arrange  the  gain  by  dividing  it 
among  ourselves."  This  is  combination  of  many  par- 
ties against  one.  Competition  is  often  defeated  by 
••combination. 

Under  either  competition  or  combination,  Exchange 
Value  depends  on  Value  in  Use.  The  price  can  not 
be  less  than  the  Value  in  Use  to  the  seller,  or  more 
than  that  value  to  the  buyer.  If  he  buys  to  sell 
again,  he  will  not  pay  more  than  the  Value  in  Use  to 
the  final  purchaser.  Values  in  Use,  therefore,  fix  the 
limits  of  Values  in  Exchange. 


CHAPTER  V. 

SUPPLY  AND  DEMAND. 

In  the  last  example,  we  considered  the  case  of  but  a 
single  animal,  although  there  were  several  purchasers. 
Now  let  us  suppose  a  large  number  of  animals  for  sale. 
And  we  shall  not  be  far  out  of  the  way  if  we  assume 
that  in  a  county  in  Illinois  there  are  a  number  of 
liorses  awaiting  the  visit  of  a  dealer.  The  Values  in 
Use  of  the  horses  in  this  county  are  very  different, 
according  to  the  circumstances  of  the  owner.  Some 
farmers  with  a  single  team  could  not  afford  to  part 
with  it  for  a  thousand  dollars,  unless  another  could  be 
purchased.  As  they  are  situated,  with  their  farm  and 
other  work,  the  Value  in  Use  is  far  greater  than  this. 
There  are  other  horses,  equally  good,  for  which  the 
owners  have  no  use,  which  they  are  feeding  in  idle- 
ness. It  would  be  better  for  the  owners  to  give  them 
away,  if  it  were  certain  that  they  could  not  be  sold  at 
any  price  within  a  reasonable  time.  The  habit,  how- 
ever, of  considering  a  horse  worth  about  so  much,  and 
the  hope  of  future  sale,  and  possibly  of  future  use, 
make  the  owner  unwilling  to  part  with  him  except 
for  some  fair  proportion  of  what  he  thinks  he  ought  to 
get.  We  may  assume  that  in  this  entire  county  there 
will  be  a  few  average  horses  for  which  the  owners 
would  take  $ 75.00,  each,  if  they  knew  that  they  could 
get  no  more.  The  total  supply  of  horses  hi  this 

(289) 


290  EXCHANGE. 

county  is  all  the  horses  there  are ;  but  the  Value  in 
Use  of  some  of  these  is  so  high  that  they  must  be  left 
out  of  the  account.  Let  us  assume  that  there  are  a> 
hundred  average  horses  for  which  the  owners  would 
take  $150.00,  each,  if  they  could  get  no  more.  While 
the  total  supply  is  all  the  horses  there  are,  the  supply 
at  $150.00  is  one  hundred  horses. 

Demand  is  desire  for  any  commodity.  The  total 
demand  is  the  total  desire,  or  all  that  would  be  taken 
by  all  the  people  if  the  price  were  nothing.  The  total 
demand  for  drinking-water  is  measured  by  the  amount 
that  is  used.  For  practical  purposes  we  usually  have 
to  deal  with  more  limited  demands,  at  fixed  prices. 
The  total  demand  for  horses  in  this  county  is  the 
number  of  the  horses  desired.  But  there  are  demands 
for  less  numbers  at  various  prices.  At  $75.00  each, 
perhaps  one  thousand  horses  could  be  sold.  At 
$150.00  each,  not  more  than  ten;  hence  the  de- 
mand at  $75.00  is  for  one  thousand  horses,  the  de- 
mand at  $150.00  is  for  only  ten. 

We  now  have  the  full  conditions  of  Supply  and  De- 
mand, and  assume  that  we  are  acting  under  free  com- 
petition. The  horses  for  sale  constitute  Supplies  at 
various  prices.  The  purchasers  embody  Demands  at 
various  prices.  How  many  horses  will  change  hands, 
and  at  what  price  or  prices  ? 

We  notice,  first,  that  assuming  competition  to  be 
free,  in  an  open  market  where  each  knows  what  the 
other  pays  and  receives,  horses  of  the  same  grade  will 
all  sell  at  the  same  price.  It  is  true  there  may  be  a 
few  men  who  would  sell  at  $75.00  rather  than  not  sell 


SUPPLY   AND   DEMAND.  291 

at  all.  But  they  are  not  numerous  enough  to  supply 
the  demand,  and  competition  among  the  purchasers 
will  enable  them  to  secure  a  higher  price.  So,  while 
there  are  a  few  men  who  would  pay  $150.00  rather 
than  not  buy,  the  supply  of  horses  at  a  lower  price 
is  so  much  greater  that  competition  will  enable  the 
buyers  to  purchase  cheaper.  Each  buyer  will  pur- 
chase where  he  can  buy  cheapest.  Each  seller  will  sell 
where  he  can  get  most.  The  final  result  will  therefore 
"be  to  secure  the  same  price  for  all.  What  will  that 
price  be,  and  what  will  be  the  number  sold  ? 

We  have  supposed  ten  horses  of  which  the  Value  in 
Use  to  the  owners  is  but  $ 75.00,  which  will  therefore 
be  sold  at  that  price  if  they  can  not  get  more ;  and 
there  are  purchasers  who  will  pay  $150.00,  each,  for 
ten  horses  if  they  can  not  get  them  for  less.  Now, 
clearly,  there  must  be  at  least  ten  horses  sold,  and  the 
price  will  be  somewhere  between  $75.00  and  $150.00. 

But  there  are  other  purchasers,  and  other  sellers. 
While  only  ten  horses  would  be  taken  at  $150.00, 
twenty  would  be  taken  at  $140.00.  Let  us  suppose 
also  that  while  there  are  but  ten  horses  for  sale  at 
$75.00  there  are  twenty  for  sale  at  $90.00,  hence  at 
least  twenty  horses  will  change  hands,  and  the  price 
will  be  between  $90.00  and  $140.00.  As  the  price  is 
reduced,  the  number  of  purchasers  increases.  At 
$130.00,  thirty  horses  would  be  taken.  Perhaps 
thirty  horses  are  for  sale  at  $100.00,  so  at  least  thirty 
horses  will  change  hands,  and  the  price  will  be  be- 
tween $100.00  and  $130.00.  At  $120.00  there  is  a 
demand  for  forty  horses.  Forty  horses  can  be  had 


292  EXCHANGE. 

for  $110.00,  consequently  at  least  that  number 
will  change  hands  at  a  price  between  $110.00  and 
$120.00.  At  $110.00  there  is  a  demand  for  fifty 
horses,  but  while  forty  horses  could  be  had  at  $110.00, 
fifty  can  not  be  had  at  less  than  $120.00,  seeing  the 
owners  of  the  last  ten  find  them  worth  more  than 
this  to  use.  Now,  fifty  horses  can  not  change  hands, 
because  the  demand  for  this  number  is  at  $110.00, 
whereas  the  supply  is  at  $120.00,  hence  the  number 
sold  must  be  less  than  fifty ;  and,  as  we  have  seen, 
greater  than  forty;  the  number  of  horses  that  will 
change  hands  will  be  between  forty  and  fifty,  and  the 
price  somewhere  between  $110.00  and  $120.00. 

This  somewhat  lengthy  supposition  has  been  written 
out  to  familiarize  ourselves  with  supplies  and  demands 
at  various  prices,  and  to  see  how  both  the  selling  price 
and  the  quantity  sold  are  finally  arrived  at  by  the  play 
of  the  forces  of  competition.  There  is  not  one,  but 
many,  Demands,  and  not  one,  but  many,  Supplies. 
We  can  not  tell  what  the  demand  is  until  we  know 
the  price  at  which  the  exchange  is  proposed.  We  can 
not  tell  what  the  supply  will  be  until  we  know  the  price 
offered  for  the  goods. 

The  Total  Demand  for  any  article  is  commensurate 
with  human  wants.  It  means  all  that  would  be  used, 
or  taken  as  a  gift.  The  Total  Supply  is  all  there  is 
of  the  commodity — all  the  wheat  in  existence ;  all  the 
horses  fit  for  use.  The  Total  Supply  of  any  article 
is  simply  the  quantity  of  it  which  exists. 

The  Demand  at  any  particular  price  is  the  quantity 
which  would  be  taken  at  that  price.  It  can  not  be 


SUPPLY   AND    DEMAND.  293 

greater  than  human  wants,  and  depends  as  much  on 
what  people  have  to  buy  with  as  on  the  wants  them- 
selves.    A  starving  man  can  not  buy  a  loaf  of  bread 
for  five  cents,  if   he  have  not  the   five  cents.      The 
Total  Demand  for  grain  is  all  that  people  could  use. 
The  Total  Demand  at  a  dollar  a  bushel  is  all  that  is 
wanted  at  that  price  by  people  who  have  the  means  to 
purchase  it.     So  there  are  various  Supplies  at  every 
possible  price.     While  the  Total  Supply  is  all  there 
is,  the  Value  in  Use  to  some  owners  is  so  great  that 
they  could  scarcely  be  induced  to  sell.     The  supply 
of  wheat  at  even  ten  dollars  per  bushel  would  prob- 
ably be  found  to  be  less  than  the  total  supply.     That 
is,   even   ten   dollars  per  bushel  would  not  call   out 
all  the  wheat  in  the  world,  although  one  dollar  per 
bushel  might  purchase  half  of  it.     What  is  called  the 
Visible  Supply  of  an  article  often  means  no  more  than 
that  portion  which  is  offered  for  sale  at  a  price  slightly 
above  the  ruling  market  rate,  and  means  the  supply 
within  possible  trade  limits.     The  reader  can  not  too 
carefully  distinguish  between  the  different  supplies  at 
various  prices,   as  well  as  between  the  different  de- 
mands at  various  prices.     The  market  rate  at  which 
exchanges  will  actually   take  place  is  that  price   at 
which  demand  and  supply  are  equal.     When  wheat  is 
selling  for  ninety  cents  it  means  that  the  supply  at 
ninety  cents  is  the  same  number  of  bushels  as  the  de- 
mand at  ninety  cents.     The  supply  of  wheat  at  one 
dollar  would  be  larger  than  the  demand.      The   de- 
mand at  eighty  cents  would  be  larger  than  the  supply, 
but  it  so  happens  that  the  amount  demanded  and  the 


294  EXCHANGE. 

supply  at  ninety  cents  are  equal ;  and  hence  this  is 
the  rate  of  exchange.  As  the  demands  and  the  sup- 
plies change,  so  the  market  rate  changes. 

While  an  increased  demand  will  unsettle  the  mar- 
ket and  require  a  higher  price,  no  one  can  tell  how 
much  higher.  An  increased  supply  will  lower  the 
market  rate ;  but  no  one  can  tell  how  much  it  will 
lower  it,  because  no  one  knows  precisely  what  the  de- 
mands at  lower  rates  are,  or  what  are  the  supplies  at 
higher  rates.  Nothing  but  a  practical  understanding 
of  the  demands  and  supplies  of  each  article,  learned 
in  practical  business,  will  make  an  accurate  judge  in 
each  case. 

Supply  and  Demand  limit  prices  even  when  there  is 
no  competition,  provided  that  all  articles  of  the  same 
grade  are  sold  at  the  same  price.  Suppose  all  the 
wheat  of  the  United  States  to  be  in  the  hands  of  a 
combination,  so  that  there  is  no  competition  between 
the  sellers.  The  price  will  depend  on  the  number  of 
bushels  of  wheat  in  existence.  There  are  some  per- 
sons who  would  pay  $  100.00  a  bushel  rather  than  not 
have  it,  but  they  would  take  only  a  limited  quantity. 
There  is  more  than  can  be  consumed  in  the  United 
States,  and  for  the  purpose  of  export  one  can  afford 
to  pay  only  ninety  cents.  Hence,  if  all  the  wheat  is 
sold  at  the  same  price,  it  must  all  be  sold  at  ninety 
cents.  The  owner  sometimes  finds  it  profitable  to  de- 
stroy half  the  supply  because  he  can  get  more  for  the 
other  half ;  or,  what  is  the  same  thing,  to  leave  half 
unsold.  In  manufacturing,  he  may  close  half  the  fac- 
tories, throw  men  out  of  employment,  and  stop  pro- 


SUPPLY    AND    DEMAND.  295 

xluction.  There  are  demands  for  a  certain  quantity  of 
the  goods  at  high  prices.  By  destroying  a  portion, 
or  limiting  production,  he  is  able  to  get  high  prices 
for  the  quantities  sold ;  and  a  high  price  for  half  may 
give  more  profit  than  a  low  price  for  the  whole. 
While  some  persons  would  pay  $  100. 00  a  bushel  for 
wheat  rather  than  do  without  it,  there  are  others  who 
will  substitute  something  in  its  place,-  if  it  cost  more 
than  ninety  cents.  So  that  the  requirement  to  sell  the 
whole  quantity  at  a  uniform  price  produces  the  same 
-effect  as  competition.  This  is  the  object  of  many 
government  regulations.  In  railroad  business  it  is 
now  provided  by  law  that  all  goods  of  the  same  class 
shall  be  carried  for  all  shippers  at  the  same  price. 
Although  the  rate  may  be  left  to  the  railroad  to  fix, 
and  although  there  are  many  shippers  who  would  pay 
several  times  the  regular  rates  if  they  could  not  ship 
for  less,  more  business,  and  more  income,  can  be  got 
at  the  rates  fixed  than  at  higher  ones.  The  law  is 
evaded,  but  if  the  principles  could  be  enforced,  and 
the  railroads  compelled  to  perform  proportional  ser- 
vices at  uniform  prices  for  all  parties,  nearly  all  the 
benefits  of  competition  would  be  secured,  even  though 
there  were  but  one  line  between  two  points. 


CHAPTER  VI. 

> 

COST  OF  PKODUCTION. 

We  have  seen  that  Exchange  Value,  the  terms  on 
which  exchanges  are  made,  is  limited  by  Value  in  Use 
and  must  be  between  the  lowest  and  the  highest  values 
to  the  parties  to  the  trade.  The  limits  are  very  wide. 
If  it  were  possible  for  a  merchant  to  buy  at  the  lowest 
Value  in  Use  and  to  sell  at  the  highest,  he  would  soon 
have  a  large  portion  of  the  wealth  of  the  earth  under 
his  control.  Under  many  circumstances,  an  article  is 
worth  nothing  to  the  seller,  and  worth  a  great  deal 
more  to  the  purchaser  that  he  ought  to  pay. 

We  have  seen  that  Value  in  Use  is  brought  within 
narrower  limits  by  competition,  and  is  usually  fixed 
by  Supply  and  Demand,  particularly  when  demand  is 
made  up  of  many  competitors  under  the  condition  of 
free  competition. 

The  next  question  is,  What  determines  Supply  and 
Demand?  We  have  seen  that  there  are  numerous 
Supplies  of  most  articles,  each  at  a  different  price ;. 
and  what  we  call  Demand  is  made  up  of  many  De- 
mands at  different  prices.  Now,  what  fixes  these  Sup- 
plies and  Demancts? 

Where  articles  are  produced  regularly,  the  supply, 
and  consequently  the  price,  usually  depends  upon  the 
Cost  of  Production.  By  the  cost  of  production  we 
always  mean,  not  what  it  has  cost  to  produce  a  given 

(296) 


COST    OF    PRODUCTION.  297 

article,  but  what  it  will  cost  to  produce  another  like 
it.  It  is  true  that  labor  and  capital  invested  in  the 
production  is  sunk,  and  that  the  price  of  the  article  is 
fixed  by  the  present  Supply ;  but  there  will  be  a  fu- 
ture Demand ;  and  if  the  goods  can  not  be  sold  this 
year,  they  may  be  retained  for  sale  next  year,  and  thus 
come  into  competition  with  future  productions.  The 
goods  of  this  year  can  not  be  sold  next  year  for  more 
than  it  will  cost  to  produce  others  like  them,  but,  if 
they  do  not  deteriorate  in  utility,  they  will  be  worth  as 
much  as  new  goods  ;  hence  the  holder  will  decline  to 
part  with  them  for  much  less  than  the  cost  of  produc- 
tion of  others  like  them  ;  and  at  a  lower  price  will 
withdraw  his  supply  from  the  market.  In  fact, 
though  the  total  supply  may  be  great,  the  supply  of- 
fered will  all  be  at  the  cost  of  producing  other  goods 
like  the  present,  less  interest,  risk,  etc.  Hence  the 
price  at  which  a  supply  will  come  on  the  market  will 
not  be  much  less  than  the  cost  of  future  production. 
If  the  present  demand  exceeds  the  supply,  this  price 
will  be  higher. 

We  may  look  at  the  matter  with  advantage  in 
another  way.  Most  goods  are  produced  to  sell.  The 
manufacturer  knows  they  will  be  of  no  use  to  him. 
He  makes  them  because  he  believes  that  there  will 
be  a  demand  at  a  certain  price.  If  there  are  indica- 
tions that  there  will  not  be  a  demand  at  this  price,  he 
will  not  produce  the  goods.  Now,  we  have  seen  that 
there  are  demands  at  various  prices.  There  is  a  de- 
mand for  cotton  cloth  at  twenty-five  cents  a  yard, 
since  a  large  quantity  could  be  sold  at  that  price  if  it 


298  EXCHANGE. 

could  not  be  had  cheaper.     There  is  a  larger  demand 
at  ten  cents ;  a  larger  demand  at  five  cents ;  a  larger 
demand   at  two   cents.     If  the   manufacturer   under- 
stands the  state  of  trade,  he  will  not  produce  goods 
enough  to  satisfy  the  demand  at  two  cents  per  yard, 
but  he  will  endeavor  to  satisfy  all  demands  above  the 
cost  of  production.     If  he  believes   that  the   supply 
will  be  so  large  as  to  bring  the  price  below  the  cost 
of  production,  he  will  shut  up  his  mills.     If  there  is 
reason  to  expect  that  the  price  will  be  greatly  above 
the  cost  of  production,  he  will  work  his  mills  to  the 
utmost  capacity;  and  perhaps  double  the  production 
•of    goods.      Competition   among    producers  and  pur- 
chasers,   therefore,   tends  to  limit  the    supply  to  the 
demand  at  the  cost  of  production ;  and  we  may  lay 
down  as  a  general  principle  that,  where  goods  are  pro- 
duced regularly,  and  the  production  can  be  increased 
or  decreased  without  great  loss,  the  price  or  exchange 
value  will  tend  to  be  that  of  the  cost  of  production. 
It  may  never  settle  into  this  exact  price,  but  it  will 
hover  about  it. 

There  has  been  considerable  discussion  as  to  what 
constitutes  the  cost  of  production.  For  practical  pur- 
poses under  the  wages  system  it  is  the  cost  to  the  pro- 
ducer. It  is  the  wages  he  pays  out,  and  the  interest 
on  the  capital  he  invests,  as  well  as  the  rent  of  the 
land  he  occupies. 

Strictly  speaking,  the  interest  should  be  computed 
only  on  what  might  be  called  free  capital ;  that  is,  the 
sum  necessary  for  the  support  of  the  laborers,  pur- 
chase of  material,  and  general  capital  which  he  could 


COST   OF   PRODUCTION.  299^ 

turn  in  some  other  direction.  The  cost  of  production 
does  not  strictly  imply  interest  on  Permanent  Pro- 
duced Wealth,  since  machinery  can  be  used  for  no 
other  purpose,  and  it  may  as  well  be  used  as  to  stand 
idle.  Unrestricted  competition,  therefore,  tends  to  re- 
duce the  price  to  the  cost  of  production,  leaving  the 
owner  of  fixed  capital  nothing  for  its  use.  This  is  best 
seen  in  the  case  of  railroads.  Suppose  there  are  two 
railroads  between  two  points,  and  they  compete  freely 
for  business.  Since  it  is  better  to  carry  freight  for 
the  cost  of  handling  than  not  to  carry  it,  if  there  is 
no  agreement  or  understanding  between  the  roads, 
unrestricted  and  complete  competition  will  reduce  the 
rate  of  freight  to  a  point  that  leaves  nothing  for  in- 
terest on  the  enormous  capital  sunk  in  the  construc- 
tion of  the  road,  and  represented  either  by  stock  or 
debts.  Competition  even  tends  to  reduce  rates  to  a 
point  which  leaves  nothing  for  the  salary  of  the  gen- 
eral manager,  because  in  each  particular  instance  it  is 
better  for  the  road  to  accept  a  rate  which  covers  the 
cost  of  carriage  than  to  lose  the  business. 

Here  is  the  weakness  of  competition.  It  is  well 
enough  where  little  fixed  capital  is  required  ;  but  it  is 
impossible  to  carry  on  great  business  enterprises,  rail- 
roads, steamships,  factories,  or  anything  which  re- 
quires vast  sums  of  fixed  capital,  on  the  principle  of 
unrestricted  competition.  The  competition  must  be 
checked  hi  some  way,  either  by  agreement,  mutual  un- 
derstanding, or  common  opinion,  in  order  to  secure  in- 
terest on  the  fixed  capital  invested. 

Practically,  however,  most  business  managers  refuse^ 


300  EXCHANGE. 

to  compete  except  on  terms  which  will  allow  interest 
on  fixed  capital.  There  are  frequent  instances  of 
railroad  wars,  when,  for  a  short  time,  goods  may  be 
carried  at  less  than  the  cost  of  transportation  ;  and 
even  retail  merchants  have  been  known,  on  account  of 
rivalry,  to  sell  at  less  than  the  cost  of  the  goods.  But 
it  is  well  understood  that  this  sort  of  thing  can  not 
continue.  Railroad  wars  always  come  to  an  end. 
Most  business  managers  prefer  to  lose,  rather  than 
make  a  price  which  will  not  allow  something  for  in- 
terest. They  recognize  that  to  do  otherwise  is  sui- 
cidal. 

Where  there  is  no  competition,  as  in  the  case  of  a 
single  railway  between  two  points,  excess  of  supply 
will  never  carry  the  price  below  the  cost  of  carriage 
plus  the  interest  on  fixed  capital.  Less  business  at  a 
higher  price  would  be  more  profitable.  When  such  a 
road  does  make  a  price  at  the  actual  cost  of  carriage, 
allowing  nothing  for  interest  on  capital,  it  is  only  to 
particular  persons  or  for  particular  classes  of  goods, 
with  the  hope  of  making  its  profit  from  other  custom- 
ers or  on  different  classes  of  goods.  In  this  case  it 
does  not  intend  to  charge  all  persons  the  same  price 
for  the  same  service,  or  proportional  prices  for  pro- 
portional services. 

As  a  general  rule,  therefore,  we  may  say  that  all 
prices,  under  competition,  tend  to  fall  to  the  money 
cost  of  production,  though  this  may  include  interest 
on  capital  invested.  When  they  go  lower  than  this, 
production  must  be  diminished  or  goods  produced 
cheaper  by  the  lowering  of  wages,  or  otherwise. 


COST   OF   PRODUCTION.  301 

It  is  wholesale  prices  that  are  here  spoken  of,  be- 
cause, in  regard  to  them,  both  buyer  and  seller  are 
better  informed  as  to  the  quality  of  the  goods  and  the 
extent  of  the  demand  and  supply.  In  retail  prices, 
there  is  room  for  considerable  margin,  through  the 
ignorance  of  the  purchaser  as  to  the  quality  and  the 
cost  of  production  of  the  goods.  If  the  seller  has 
the  reputation  of  being  trustworthy,  so  that  the  cus- 
tomer feels  sure  he  is  getting  goods  that  are  just  what 
lie  supposes,  he  will  pay  a  considerable  profit  rather 
than  go  where  he  can  not  be  sure  of  the  quality  of 
what  he  buys.  Even  in  retail  prices,  competition  acts 
through  supply  and  demand,  but  there  is  far  more 
margin.  It  limits  the  range  of  prices,  but  not  so 
closely ;  so  that  the  same  quality  of  goods  may  sell  for 
fifty  per  cent,  more  in  one  place  than  in  another. 
Competition  is  not  inactive,  however,  when  it  fixes 
such  limits  as  these.  The  limits  of  Value  in  Use  are 
very  much  wider. 

The  application  of  the  Cost  of  Production  is  con- 
fined mainly,  though  not  entirely,  to  the  Resources 
Produced  by  Human  Industry.  It,  of  course,  has  noth- 
ing to  do  with  Natural  Resources,  which  man  does  not 
produce,  except  in  the  few  instances  where  they  can  be 
replaced  by  the  efforts  of  human  industry. 

The  Cost  of  Production  has  much  more  influence  on 
those  goods  that  are  produced  and  consumed  year  by 
year  than  on  those  which  are  of  a  more  permanent 
nature.  Permanent  Produced  Wealth,  such  as  dwell- 
ings, lasts  for  many  years  or  even  centuries.  If  pro- 
duction ceases,  the  supply  is  not,  therefore,  very  rapidly 


302  EXCHANGE. 

reduced.  The  same  effect  is  caused,  however,  by  are 
increase  of  population,  which  demands  an  increase  in 
the  supply.  Suppose  there  were  more  dwellings  in  a- 
city  than  could  be  used.  The  price  would  naturally 
fall  below  the  cost  of  production.  Now,  though  pro- 
duction were  entirely  to  cease,  the  supply  would  still 
be  more  than  sufficient  for  a  stationary  population,  un- 
til the  buildings  were  destroyed  by  time ;  and  for  more 
than  a  generation  the  price  might  rule  below  the  cost 
of  rebuilding.  This  has  happened  in  some  villages 
which  have  made  no  growth  for  years.  If,  however, 
population  increases,  the  dwellings  are  soon  insuffi- 
cient, not  for  the  old,  but  for  the  increased  population  ; 
more  must  be  built,  and  when  the  necessity  for  further 
production  arises,  the  Exchange  Value  of  all  dwellings 
will  be  brought  up  to  the  cost  of  producing  others  as 
good.  Thus  the  Exchange  Value  of  Produced  Wealth 
tends  to  the  Cost  of  Production,  in  the  long  run.  For- 
tunes may  be  made  or  lost  while  the  pendulum  is- 
swinging  to  one  side  or  the  other,  through  a  period 
of  months  or  years.  It  is  to  be  remembered  that  by 
the  Cost  of  Production  we  do  not  mean  what  an  arti- 
cle cost  when  it  was  made — that  is  a  matter  of  no  con- 
sequence in  determining  Exchange  Value— but  what  it 
is  believed  it  will  cost  to  make  another  as  desirable. 
The  fashions  change ;  a  house  built  a  few  years  ago  is- 
out  of  style.  One  can  now  be  built  for  half  the 
money,  which,  though  not  so  good  in  some  respects^ 
is  to  most  people  as  desirable  as  the  old.  The  old  is, 
therefore,  worth  what  this  new  house  would  cost.  In 
applying  the  Cost  of  Production  to  values,  we  con- 


COST   OF   PRODUCTION.  303 

sider  only  what  it  will  cost  to  make  something  which 
will  satisfy  wants  as  well  as  what  we  have.  The  cost 
may  be  less  than  half,  or  more  than  twice  as  much, 

COST  OF  PRODUCTION  TO  THE  LABORER. — The 
cost  of  production  has  thus  far  been  considered  with 
reference  to  a  manufacturer  who  employs  labor  for 
wages.  The  wages  are  themselves  fixed  by  Supply 
and  Demand,  but  he  has  to  take  account  only  of  what 
he  pays,  what  the  manufactured  goods  cost  him. 

Where  one  produces  goods  by  his  own  labor,  as  a 
country  shoemaker,  or  the  members  of  a  co-operative 
factory,  the  cost  of  labor  is  the  irksomeness  of  it. 
Under  such  a  system  there  would  still  be  a  cost  of 
production  which  the  laborers  would  have  to  estimate 
in  the  disagreeableness  of  the  labor.  One  would  de- 
termine whether  he  were  willing  to  expend  labor 
enough  in  the  future  to  replace  the  article  for  the 
price  he  is  offered.  If  not,  while  he  might  be  com- 
pelled to  sell  for  what  he  could  get,  production  on  his 
part  would  cease. 

The  cost  of  labor  to  the  laborer  is  the  Value  in  Use 
to  him  of  leisure,  and  increases  with  the  number  of 
hours  and  disagreeableness  of  the  work. 

If  all  production  were  conducted  by  means  of  co- 
operation, and  no  wages  were  paid,  the  present  wages 
question  would  be  carried  over  into  the  price  of  the 
goods  produced ;  the  price  would  depend  upon  the 
supply  of  various  forms  of  labor,  and  the  demand  for 
various  kinds  of  goods.  Let  us  suppose  the  men  of  a 
co-operative  shoe  factory  have  produced  a  quantity  of 
shoes  which  they  place  on  the  market.  If  they  can 
20 


304  EXCHANGE. 

get  no  more  than  the  material  cost,  they  would  better 
sell  them,  since  their  labor  has  been  already  expended 
and  is  lost.  But  if  they  believe  they  can  get  no  more, 
they  will  cease  producing  shoes ;  and  the  supply  being 
diminished,  the  price  will  rise.  These  men  will  not 
willingly  remain  in  idleness;  they  will  seek  to  pro- 
duce something  which  gives  the  greatest  return  to  la- 
bor; and  by  their  production  they  will  increase  the 
supply  of  something  else,  and  hence  diminish  the 
price. 

The  method  by  which  labor  is  transferred  from  one 
product  to  another  is  seen  in  the  case  of  the  average 
farmer  in  the  Northern  States,  who  raises  a  variety 
of  crops.  One  element  of  the  cost  of  production  to 
him,  is  his  own  labor,  and  the  sacrifice  of  ease  it  in- 
volves. If  the  price  of  wheat  rules  low  for  a  number 
of  years,  he  turns  his  attention  to  the  raising  of  wool 
or  live  stock.  He  may  unconsciously  estimate  the  cost 
of  each  product  in  the  labor  required  to  produce  it. 
He  does  not  raise  some  crops,  because  there  is  too 
much  work  about  them ;  though  if  the  supply  is  so 
greatly  reduced  as  to  advance  the  price,  farmers  will  be 
found  to  produce  these  very  crops.  The  price  of  what 
these  farmers  raise  will  thus  be  governed  by  the  cost 
of  production  to  them,  measured  in  their  labor.  The 
average  price  of  the  commodities  which  the  farmers 
of  a  certain  State  produce  will,  therefore,  be  governed 
Iby  the  labor  cost  of  producing  them.  This  is,  how- 
ever, only  the  relative  cost  as  measured  in  the  various 
commodities  produced  by  the  farmers  of  this  State ; 
and  has  nothing  to  do  with  the  cost  measured  in  the 


COST   OF   PRODUCTION.  305 

•commodities  produced  in  the  distant  factory,  or  in  a 
State  with  an  entirely  different  climate.  The  relative 
prices  of  wheat  and  wool  and  pork  will  depend  on  the 
labor  cost  of  their  production. 

If  there  were  no  friction,  and  men  could  freely  go 
from  one  employment  to  another,  the  supply  of  the 
various  productions  of  human  industry  would  be  con- 
trolled so  as  to  be  sold  at  prices  which  would  give  the 
same  reward  to  all  laborers  of  equal  ability,  in  pro- 
portion to  the  disagreeableness  of  the  labor. 

In  practice  the  division  can  never  be  so  simple. 
We  meet  first  what  Professor  Cairnes  called  "-non- 
competing  groups."  Two  men  learn  a  trade  ;  the  one 
is  a  printer,  the  other  a  carpenter.  They  may  be  of 
equal  natural  ability,  but  arrived  at  middle  life  neither 
can  do  the  work  of  the  other  without  years  spent  in 
learning  a  new  trade,  which  can  not  be  learned  as  well 
as  in  boyhood.  Practically  there  is  no  competition 
between  these  men.  Still  less  is  there  competition  be- 
tween the  watchmaker  and  the  stone  mason  ;  the  law- 
yer and  the  civil  engineer  ;  the  teacher  and  the  physi- 
cian. Only  in  common  labor  is  the  full  force  of  com- 
petition felt,  and  here  the  cost  of  production  to  the 
laborer  is  estimated  in  the  disagreeableness  of  the  la- 
bor and  the  amount  he  can  accomplish.  Every  group 
of  laborers,  however,  competes  within  itself,  and  the 
reward  within  that  group  is  likely  to  bear  some  pro- 
portion to  the  amount  one  is  able  to  accomplish,  or  the 
quality  of  the  work  he  does.  In  the  professions  the 
quality '  of  the  work  may  be  so  important  a  matter 
that  many  men  have  no  competition,  even  in  their  own 
group. 


CHAPTER  VII. 

MONOPOLY. 

Monopolies  are  the  result  of  natural  advantages,  or 
of  legislation,  or  of  the  combination  of  competitors, 
and  are  by  no  means  to  be  condemned  indiscriminately. 

If  a  singer  is  without  a  rival,  though  he  can  not 
command  his  own  price  for  singing,  he  controls  the 
entire  supply,  and  can  get  what  the  people  consider 
the  full  Value  in  Use  of  his  song.  No  monopoly  will 
enable  one  to  obtain  more  than  this. 

Artificial  Monopolies  are  of  two  kinds :  those  granted 
by  act  of  government,  and  enforced  by  its  power ;  and 
combinations  of  private  parties  who  would  naturally 
be  competitors.  Many  privileges  have  been  granted 
by  governments  to  favorites  in  former  times,  as  well 
as  to  private  parties  in  return  for  some  service  to  the 
government.  Many  of  these  have  provoked  great  in- 
dignation. The  present  patent  system  of  the  United 
States  is  a  monopoly  for  a  term  of  years.  The  in- 
ventor is  given  the  exclusive  right  of  manufacture — 
not  for  the  same* reason  that  an  author  has  the  right 
to  control  the  sale  of  his  productions,  but  as  an  en- 
couragement to  invention. 

The  author  and  the  inventor  should  never  be  con- 
fused. The  principles  on  which  copyright  and  patent 
right  are  granted  are  as  different  as  two  things  can  be. 
The  inventor  who  has  bestowed  time  and  capital  in 

(306) 


MONOPOLY.  307 

Bringing  out  his  invention,  is  entitled  to  something  for 
his  successful  labor,  put  forth  for  the  benefit  of  the 
whole  people.  As  a  rough  measure  of  his  reward,  we 
give  him  a  monopoly  of  his  invention  for  a  limited 
number  of  years,  on  the  theory  that  perhaps  no  one 
else  would  have  invented  it  within  that  time ;  and 
that,  in  any  case,  this  is  a  convenient  method  of  re- 
warding him.  Whether  there  could  be  a  better  method 
is  a  question  of  practical  statesmanship. 

EFFECT  OF  MONOPOLY  ON  PRICE. — What  price  a 
Monopoly  will  obtain  will  depend,  first,  on  whether 
it  is  compelled  to  sell  to  all  persons  at  the  same  price, 
or  is  able  to  charge  each  one  all  he  can  afford  to  pay, 
regardless  of  the  others. 

If  compelled  to  sell  at  the  same  price  to  all,  it  can 
obtain  only  the  Value  in  Use  to  the  purchaser  who 
can  afford  to  pay  the  least.  Let  one  have  a  monop- 
oly of  the  supply  of  flour  for  a  city.  There  are  people 
who  would  pay  a  hundred  dollars  a  barrel,  rather  than 
do  without  it ;  others  would  pay  fifty,  others  ten  dol- 
lars. As  it  will  be  impossible  to  sell  his  goods  at 
different  prices,  the  holder  will  fix  the  price  at  which 
his  entire  stock  will  bring  the  most  money.  If  the 
price  be  a  hundred  dollars  per  barrel,  only  the  wealthy 
can  afford  to  take  it.  One  will,  perhaps,  get  more 
money  by  selling  at  ten  dollars  per  barrel,  and  selling 
twenty  times  as  much.  In  many  cases  he  who  has  a 
monopoly  can  get  more  by  deliberately  destroying  a 
part  of  his  product.  If  he  has  all  the  flour  that  the 
city  can  use,  he  can  get  only  the  price  for  each  barrel 
that  the  poorest  can  afford  to  pay.  If  he  destroy  half 


308  EXCHANGE. 

of  his  stock,  the  poorest  of  those  able  to  consume  it 
can  pay  a  large  price ;  and  his  receipts  for  half  may  be, 
therefore,  more  than  they  would  have  been  for  the 
whole.  Of  course,  suffering  would  be  inflicted  upon 
the  people,  and  those  who  obtained  flour  would  pay 
far  more  than  otherwise,  but  we  are  considering  Ex. 
change  Value.  Exchange  is  heartless;  what  control 
it  should  be  subjected  to  is  another  question. 

Instead  of  destroying  stock,  Exchange  Value  can 
be  as  well  maintained  by  limiting  production.  If  the 
product  can  be  limited,  it  will  be  sold  at  what  it  is 
worth  to  the  lowest  purchaser,  and  production  can  be 
limited  until  this  value  is  above  cost.  The  advan- 
tage of  Monopoly  consists  in  the  power  to  obtain  the 
full  Value  in  Use  to  the  men  to  whom  it  is  worth 
least.  It  may  be  very  much  above  the  Cost  of  Pro- 
duction, and  very  much  above  the  price  which  would 
have  been  fixed  by  Competition. 

WHAT  PRICE  WILL  THE  MONOPOLIST  Fix? — He 
can  not  fix  a  price  above  the  Value  in  Use  to  the  con- 
sumers. Within  that  limit,  his  price  will  depend  on 
the  quantity  he  can  most  profitably  dispose  of.  When 
goods  must  be  sold  all  at  the  same  price,  a  very  small 
profit  on  a  large  quantity  may  exceed  a  large  profit  on 
a  small  quantity.  Suppose  the  Sugar  Trust  to  have — 
what  it  can  not  have — an  absolute  monopoly.  There 
exists  a  Value  in  Use,  a  demand,  for  a  certain  quan- 
tity at  ten  dollars  a  pound ;  but  it  would  be  impossi- 
ble to  wholesale  sugar  at  two  prices,  and  although  the 
ten  dollars  a  pound  would  be  practically  all  profit,  the 
total  sum  received  might  be  less  than  a  profit  of  half 


MONOPOLY.  309 

a  cent  a  pound  on  the  enormous  demand  at  five  cents. 
Those  having  an  absolute  monopoly  of  this  kind  care- 
fully estimate  the  various  demands,  with  the  quantity 
desired  at  various  prices,  and  fix  a  price  which  gives 
the  greatest  total  profit.  Many  wants  must,  of  course, 
be  left  unsupplied ;  it  is  possible  that  double  the 
wants  could  be  supplied  at  a  lower  price,  with  nearly 
as  much  profit,  but  that  is  a  matter  of  indifference  to 
the  monopoly.  What  it  wants  is  the  greatest  total 
profit,  and  it  rather  prefers  to  make  it  on  a  small 
quantity  than  a  large,  since  it  is  less  trouble  and  risk. 
This  is  one  of  the  arguments  for  the  control  of  certain 
necessary  monopolies  by  the  people,  of  which  the  post- 
office  is  an  example.  A  private  monopoly  would  esti- 
mate how  it  could  make  the  most  money.  Suppose  it 
concluded  that  the  largest  profit  could  be  made  at  car- 
rying letters  at  five  cents  each ;  at  the  same  time,  let- 
ters could  be  carried  at  two  cents,  with  a  total  profit 
nearly  as  large,  because  there  would  be  several  times 
as  much  business.  If  the  government  is  in  control,  it 
will  always  choose  to  satisfy  the  largest  number  of 
wants  at  the  lowest  price,  rather  than  a  smaller  num- 
ber of  wants  at  a  higher  price,  the  total  profit  being 
the  same.  Not  caring  to  make  a  profit  at  all,  it  may- 
see  that,  at  an  insignificant  loss  to  itself,  it  can  carry 
ten  times  the  number  of  letters  for  the  people  at  half: 
the  cost  to  a  private  corporation,  because  the  latter- 
would  not  accept  the  small  loss  necessary  to  gain  the; 
enormous  business. 

When   the  monopoly   is  not  compelled  to   sell  its 
goods  at  the  same  price  to  every  purchaser,  it  can 


310  EXCHANGE. 

charge  the  full  Value  in  Use  to  each  one  ;  and  thus 
secure  far  higher  average  prices.  It  will,  under  these 
circumstances,  perhaps  make  even  lower  prices  to 
those  unable  to  pay  more,  than  the  price  would  be  if 
compelled  to  serve  all  alike.  It  can  afford  to  sell  at 
any  price  at  which  it  makes  a  profit,  to  those  to  whom 
the  goods  are  worth  least,  and  may  get  a  hundred 
times  as  much  from  those  able  to  pay  more.  In  this 
case,  the  monopoly  gets  the  full  Yalue  in  Use  from 
everybody  ;  when  it  is  compelled  to  sell  at  the  same 
price,  it  gets  only  the  Yalue  in  Use  from  those  to 
whom  the  goods  are  worth  least.  There  are,  however, 
few  complete  monopolies.  Nearly  all  have  something 
to  fear  f rqm  possible  competition  or  legal  enactments ; 
so  that  it  is  seldom  that  the  price  can  be  carried  as 
high  in  practice  as  in  theory.  Most  monopolies  are 
contented  with  absorbing  the  greater  portion  of  the 
business,  and  with  getting  a  price  very  much  less  than 
.could  be  had  in  theory. 

The  monopolist  will  naturally  endeavor  to  fix  his 
prices  at  the  point  which  will  give  him  the  largest  in- 
•come.  If  he  have  a  monopoly  of  the  necessities  of 
life,  such  as  wheat  in  a  famine,  he  can  take  all  the 
people  have,  as  did  Joseph  under  Pharaoh ;  though  in 
.modern  times,  even  if  the  monopolist  were  not  pre- 
vented by  moral  considerations,  the  people  would  com- 
pel him  to  sell  at  some  price  not  far  above  the  cost  of 
production.  Few  monopolies  are  of  this  character. 
The  monopolist  knows  that  people  can  find  some 
way  to  do  without  his  service ;  and,  besides,  he  wishes 
to  reach  a  large  number  of  consumers,  since  large 


MONOPOLY.  311 

profits  must  depend  on  large  numbers  of  people.  He 
knows,  also,  that  public  sentiment  may  discourage  the 
use  of  his  goods,  even  at  a  price  that  would  be  profit- 
able to  the  user ;  and  the  sum  which  he  will  add  to 
the  cost  of  production  on  account  of  his  monopoly  is  a 
matter  for  careful  judgment.  The  theater  manager 
will  prefer  to  sell  a  thousand  seats  at  three  dollars 
each  to  selling  two  thousand  at  one  dollar,  but  the 
popular  show  may  find  that  it  can  sell  a  thousand 
seats  at  twenty-five  cents,  when  it  could  not  sell  a 
hundred  at  one  dollar.  Each  man  who  controls  a 
monopoly  will  settle  these  prices  for  himself  in  ac- 
cordance with  the  circumstances.  Moral  and  other 
considerations  sometimes  enter  in,  and  one  does 
not  always  take  all  the  profit  his  monopoly  makes 
possible. 


CHAPTER  VIII. 

MONEY. 

Money  and  its  substitutes,  and  credit,  are  the  prin- 
cipal means  by  which  exchanges  take  place.  With- 
out it,  very  few  exchanges  would  be  made.  Few  ques- 
tions can,  therefore,  be  more  important  in  Economics 
than  the  money  problem. 

Money  is  anything  which  is  generally  received  in 
exchange,  not  for  the  purpose  of  use,  but  with  the  ex- 
pectation that  it  will  buy  anything  for  sale.  The  pos- 
session of  no  mere  commodity  gives  this  power.  One 
may  be  rich  in  land  or  in  cattle,  but  he  will  find  it 
very  difficult  to  exchange  these  things,  directly,  for 
what  he  wants.  Money  will  buy  anything ;  hence,  if 
he  wants  to  buy,  he  hastens  to  exchange  his  cattle  for 
money.  The  only  essential  characteristic  of  money  is 
its  general  acceptability. 

It  by  no  means  follows  that  all  money  is  good 
money.  Some  very  foolish  schemes  have  passed  into 
legislation,  and  nations  have  suffered  greatly  from  the 
actions  of  their  rulers ;  but  we  are  not  to  condemn 
these  schemes  by  assuming  that  the  circulating  medium 
was  not  money.  It  is  because  it  was  money,  made  so- 
by  the  acquiescence  of  the  people,  that  the  suffering 
has  been  so  great,  and  the  loss  far  greater  than  even 
the  sufferers  realized. 

(312) 


MONET. 

PART  I. — QUALITIES  OF  A  GOOD  MONEY. 

UNCHANGEABLE  VALUES. — The  first  quality  of  a 
good  money  is  unchangeableness  in  values.  Money  is- 
first  bought  by  the  holder  with  what  he  has  to  sell — 
his  labor,  farm  produce,  manufactures,  etc. — and  then 
used  by  him  to  buy  other  goods  with.  He  must  take 
into  account  what  he  has  to  give  for  a  dollar,  just  as 
much  as  what  a  dollar  will  buy.  He  does  not  usually 
give  the  same  class  of  goods  for  money  that  he  buys 
with  money.  It  is  an  education  to  learn  how  much 
a  dollar  will  buy — an  education  which  some  people 
never  gain.  We  do  not  realize  the  effect  of  a  change 
in  the  values  of  money  on  the  common  people  when 
once  they  have  become  accustomed  to  certain  values. 
It  is  desirable  that  the  average  of  the  values  of  money 
shall  remain  the  same,  so  that  the  change  of  any  par- 
ticular value,  as  in  that  of  wheat,  can  be  explained  by 
a  short  crop  or  some  other  evident  cause.  There  will 
be  a  constant  change  in  the  values  of  various  articles, 
due  to  natural  causes ;  but  some  being  in  one  direc- 
tion and  others  in  the  other,  the  tendency  is  to  bal- 
ance one  another.  A  thousand  dollars  ought  to  buy, 
in  the  wholesale  market,  the  same  average  quantity  of 
all  the  articles  in  common  use  by  the  people. 

A  change  in  average  prices  does  not  show  that  the 
values  of  the  goods  have  changed  (since  these  values 
are  measured  by  other  goods),  but  that  the  values  of 
money  have  changed  ;  and  it  is  this  variation  in  the 
values  of  money  which  it  is  all-important  to  avoid. 
At  one  time  during  the  Civil  War  wheat  sold  at  three 


314  EXCHANGE. 

dollars  a  bushel.  The  price  has  since  been  less  than 
one  dollar.  Does  any  one  suppose  that  the  values 
of  wheat  were  three  times  as  great  then  as  now  ?  By 
no  means ;  a  dollar  is  now  worth  three  times  as  much. 
The  change  is  not  in  the  values  of  the  wheat,  but  in 
the  values  of  the  money. 

It  is  the  common  people  who  suffer  most  by  changes 
in  the  values  of  money  in  either  direction.  One  with 
other  business  to  attend  to  can  not  always  be  making 
calculations  as  to  how  much  of  each  article  a  dollar 
ought  to  buy,  or  how  much  more  or  less  it  ought  to 
buy  than  it  did  a  year  ago.  It  has  required  years, 
from  childhood  up,  to  fix  in  his  mind  the  values  of  a 
dollar  at  all.  It  is  no  trifling  part  of  the  education  to 
learn  the  lengths  of  a  yard,  foot,  mile,  weight  of  a 
pound  and  size  of  a  gallon,  so  that  when  any  distance 
or  weight  is  mentioned  one  will  have  a  vivid  concep- 
tion of  it.  It  requires  more  years  of  experience  to 
form  a  vivid  conception  of  the  values  of  a  dollar.  The 
child  knows  that  the  nickel  will  buy  so  much  candy, 
but  it  is  long  years  before  he  gets  fixed  in  his  mind 
the  prices  of  all  goods  he  is  likely  to  want.  If,  now, 
the  values  of  the  dollar  change,  the  prices  of  all 
these  goods  change,  or  ought  to  change,  and  he  has 
them  all  to  learn  over  again.  He  is  not  likely  to  do 
it.  He  unconsciously  estimates  the  dollar  at  its  old 
value. 

If  any  one  doubts  the  enormous  loss  to  the  mass  of 
the  people  caused  by  every  change  in  the  value  of 
money,  he  has  only  to  reflect  how  difficult  it  is  for 
even  the  more  intelligent  to  change  habits  once  formed. 


MONEY.  315 

One  becomes  accustomed  to  expecting  that  a  dollar  will 
buy  about  so  much  of  what  he  wants.  If  there  is  a 
change  in  the  price  of  any  article,  he  wants  to  know 
the  reason  why.  Is  it  scarcer,  or  is  the  dealer  making 
more  profit?  When  the  values  of  money  remain  the 
same,  he  can  usually  ascertain  these  facts  and  act  ac- 
cordingly ;  but  when  the  values  of  money  are  contin- 
ually changing,  the  price  of  all  articles  must  change 
with  it,  and  he  is  at  sea.  He  can  not  figure  it  out. 
Not  one  man  in  a  thousand  in  the  population  of  the 
United  States  can  figure  it  out,  and  the  opportunities 
for  a  few  men  to  make  money  by  taking  a  little  from 
all  the  people  are  vastly  increased.  It  is  good  times 
for  the  making  of  fortunes  by  a  few,  rather  the  lucky 
than  the  intelligent,  but  it  is  bad  times  for  the  people 
at  large.  As  one  does  not  know  what  he  will  have  to 
pay  in  the  future,  he  does  not  know  how  much  he 
ought  to  have  for  his  labor  or  the  commodities  he 
has  for  sale. 

It  must  be  remembered  that  a  fall  in  the  value  of 
money  means  a  rise  in  prices ;  and  a  rise  in  the  value 
of  money,  a  fall  in  prices — always  the  reverse.  A 
dollar  rises  in  value  because  it  will  buy  more  wheat — 
two  bushels  instead  of  one;  but  when  a  dollar  will 
buy  two  bushels  of  wheat,  wheat  has  fallen  in  price  to 
fifty  cents.  Exchange  is  like  a  balance  :  when  one  side 
goes  up,  the  other  side  goes  down.  When  the  value 
of  money  goes  up,  prices  of  other  things  go  down. 
When  the  value  of  money  goes  down,  the  prices  of 
other  things  go  up. 

It  is  impossible,  except  by  more  pages  of  detailed 


316  EXCHANGE. 

illustration  than  there  is  room  to  insert,  to  bring  our- 
rt  selves  to  realize  anything  like  the  loss  which  conies  to 
the  people  at  large  by  any  change  in  the  value  of 
money.  Every  change  tends  to  make  the  rich  rel- 
atively richer,  and  the  poor  relatively  poorer.  It 
tends  to  the  failure  of  great  numbers  of  honest  and 
fairly  well-to-do  business  men,  and  to  the  building  up 
of  large  fortunes.  Every  change  in  the  value  of 
money  opens  opportunities  for  a  more  unequal  dis- 
tribution of  wealth. 

Deferred  Payments.  —  Changes  in  the  value  of 
money  in  relation  to  debts  and  credits  are  more  easily 
brought  home  to  the  conception  of  every  one.  In 
our  civilization  debt  and  credit  are  unavoidable.  It 
is  by  the  loan  of  capital  from  those  who  are  not  in  a 
position  to  use  it  to  the  best  advantage,  to  those  who 
can  profitably  use  it  in  production  or  business,  that 
the  wealth  of  the  country  is  greatly  increased,  and  the 
wants  of  all  better  supplied.  But  when  one  borrows, 
what  is  he  to  repay  ?  What  can  he  pay  ?  The  farmer 
<?an  pay  only  with  farm  produce;  the  manufacturer, 
with  the  products  of  his  factory.  If  one  promises  to 
pay  money,  when  the  note  is  due  he  must  go  and  buy  ' 
the  money  with  his  farm  produce  or  the  goods  he  has 
manufactured.  Only  in  the  rare  case  of  the  gold 
digger  can  he  pay  the  debt  out  of  the  products  of  his 
business.  He  must  buy  the  money  to  pay  with.  It 
is  just  as  important  to  know  how  much  the  money  will 
<?ost  as  to  know  how  much  money  one  is  to  pay. 
Every  borrower  unconsciously  assumes  that  it  will 
cost  just  what  it  did  when  he  made  the  loan.  If 


MONEY.  317 

wheat  is  a  dollar  a  bushel,  the  farmer  assumes  that, 
with  ordinary  crops,  a  bushel  of  wheat  will  buy  a  dol- 
lar when  he  has  the  debt  to  pay.  He  is  not  likely  to 
take  into  account  that,  with  ordinary  crops,  it  may  re- 
quire twice  as  many  bushels  of  wheat  to  buy  a  dollar  as 
it  did  when  the  loan  was  made.  This  was  practically 
the  state  of  affairs  some  years  after  the  Civil  War. 
Men  had  purchased  farms,  paying,  say  half  their 
value  in  cash,  and  giving  a  mortgage  for  the  other 
half.  Paying  debts  is  slow  work ;  and,  although  the 
mortgage  may  have  been  renewed,  or  replaced  by  an- 
other mortgage,  many  farmers  paid  little  more  than 
the  interest ;  and  at  the  end  of  ten  years  owed  as 
much  as  at  the  beginning.  But  money  had  doubled 
in  value.  It  took  just  twice  as  much  farm  produce 
to  buy  a  dollar  as  when  the  debt  was  made.  The 
creditor  got  just  twice  as  much  value  as  he  loaned, 
because  a  dollar  was  worth  twice  as  much.  The  farm 
which  was  worth  $4,000,  for  which  the  purchaser 
gave  $2,000  cash,  and  a  mortgage  of  $2,000  more, 
is  now  worth  precisely  the  face  of  the  mortgage,  and 
the  purchaser  has  lost  his  original  $2,000.  Where 
the  mortgage  has  been  paid,  and  the  land  is  worth 
as  much  as  when  it  was  bought,  it  is  because  of  the 
natural  rise  in  its  value  ;  and  the  creditor  has  absorbed 
the  value  of  that  rise  instead  of  the  farmer.  He  has 
also  absorbed  a  considerable  portion  of  the  farmer's 
earnings.  Had  there  been  no  change  in  the  value  of 
money,  the  creditor  would  have  got  precisely  as  much 
as  he  loaned,  and  the  farmer  would  be  seen  to  have 
accumulated  more  property,  or  perhaps  have  lived 


318  EXCHANGE. 

better  in  the  meantime.  The  increase  in  the  value  of 
money  has  thrown  the  great  gain  in  national  wealth 
into  the  hands  of  the  few,  and  built  up  a  few  fortunes 
of  millions,  which  would  otherwise  have  been  distrib- 
uted more  equally  among  the  people. 

A  decrease  in  the  value  of  money,  with  the  con- 
sequent general  rise  in  prices,  is  also  unfortunate.  It 
is  the  creditors  now  who  lose.  The  loss  in  either  case 
is  not  to  debtor  and  creditor  alone ;  it  is  to  the  whole 
country.  It  makes  business  uncertain,  teaches  the 
people  habits  of  speculation,  and  gives  fortunes  to 
the  lucky  and  unscrupulous,  rather  than  as  a  reward 
of  honest  industry.  There  is  no  national  question  of 
so  much  importance  as  the  unchangeable  value  of 
money.  Changes  in  the  yardstick  and  the  pound 
weight  would  be  a  less  misfortune  than  changes  in  the 
value  of  the  dollar  which  measures  all  contracts. 

A  continued  increase  in  the  value  of  money  paralyzes 
business.  It  is  usually  the  enterprising  manuf  acturers, 
farmers  and  business  men  who  are  in  debt.  They  are 
the  life  of  business ;  without  them  the  wheels  of  pro- 
duction move  more  slowly.  Without  business  men 
who  borrow  money,  great  numbers  of  men  are  thrown 
out  of  employment,  simply  because  there  is  no  one  to 
set  them  at  work.  The  capitalist  can  not  do  it.  He 
may  be  a  minor  heir,  an  insane  man,  a  pleasure-loving 
man  in  Europe,  or  a  good  man  who  recognizes  his  own 
lack  of  business  ability.  The  capital  may  be  in  banks, 
belonging  to  owners  of  small  sums  which  they  can  not 
use  in  production.  The  greater  portion  of  this  capital 
will  not  be  used  to  keep  the  men  of  the  nation  em- 


MONEY.  319 

ployed,  and  to  carry  on  production  economically,  ex- 
cept in  the  hands  of  competent  borrowers.  How 
much  better  for  the  country  when  a  competent  young 
man  runs  in  debt  for  a  farm  with  a  reasonable  pros- 
pect of  paying  for  it  during  his  lifetime,  than  if  the 
same  young  man  is  content  to  remain  a  tenant ! 

Nothing  is  so  discouraging  to  a  debtor  as  to  feel 
that  he  must  pay  more  than  he  borrowed,  and  where 
money  is  increasing  in  value  he  must  pay  more.  The 
price  of  goods  is  continually  falling,  and  men  will  not 
do  business  on  a  falling  market  if  they  can  help  it. 
They  would  rather  be  out  of  business  and  let  the  pro- 
duction of  the  country  stop ;  and  this  means  a  finan- 
cial panic,  in  which  rich  and  poor  lose  ten  times  what 
the  creditor  has  gained  by  getting  a  little  more  value 
than  he  loaned. 

If  there  were  to  be  any  continued  change  in  the 
value  of  money,  it  would  be  better  to  have  it  slowly 
decrease  rather  than  slowly  increase,  because  business 
is  always  active  on  a  rising  market.  Now,  it  is  not 
simply  that  business  men,  who  are  mostly  borrowers, 
make  a  little  more  profit ;  the  important  result  is  that 
business  is  active,  and  every  man  in  the  country  has, 
an  opportunity  to  work ;  all  capital  is  employ ed.. 
Mills  do  not  stand  idle.  More  goods  are  produced, 
and  the  people  have  more.  Wants  are  better  sup- 
plied. It  is  a  question,  indeed,  if  full  activity  is  ever 
seen  except  on  a  rising  market,  with  at  least  a  slight 
fall  in  the  value  of  money. 

But  how  about  the  creditor  ?  Will  not  he  be  paid 
less  value  in  goods  than  he  loaned  ?  Certainly.  He 
21 


320  EXCHANGE. 

loses  as  much  as  the  debtor  gains,  directly;  but 
great  gain  to  the  country  is  a  hundred  times  this,  in 
the  activity  of  business,  in  the  keeping  of  men  at 
work,  and  in  the  prevention  of  waste.  It  is  probable 
that  most  creditors  would  gain  in  the  constant  employ- 
ment of  their  capital,  and  in  fewer  losses  through  fail- 
ures, more  than  they  lose  in  a  slight  depreciation. 
But  the  real  protection  to  the  creditor  is  in  the  oppor- 
tunity of  obtaining  higher  interest,  sufficient  to  make 
good  the  depreciation  of  his  capital.  Money  is  now 
loaned  on  the  undoubted  security  of  government  bonds 
at  less  than  three  per  cent.,  free  of  taxes.  If  money 
were  depreciating  in  value  at  the  rate  of  one  per  cent, 
a  year,  the  rate  of  interest  would  rule  at  least  one  per 
cent,  higher.  Not  so  much  through  an  endeavor  to 
keep  good  one's  capital,  as  from  the  fact  that  the 
greater  demand  for  loans  in  active  business  would 
carry  the  rate  of  interest  up.  So  that  it  is  not  im- 
possible that  the  increased  rate  of  interest  would  ac- 
tually give  the  lender  returns  more  than  sufficient  to 
balance  his  loss. 

But  this  has  been  written  only  for  the  sake  of  mak- 
ing the  subject  clearly  understood.  Justice  requires 
';that  we  use  our  utmost  endeavor  to  prevent  any 
change  in  the  values  of  money  ;  but,  if  there  is  to  be 
a  change,  it  is  far  better  that  it  be  in  the  direction  of 
a  slight  depreciation  instead  of  an  increase.  An  in- 
crease in  the  value  of  money  means  idleness,  an  enor- 
mous loss  to  a  nation,  in  addition  to  the  small  amount 
unjustly  paid  by  the  debtor  to  the  creditor.  A  de- 
crease in  the  value  of  money  means  a  great  gain  to 


MONEY.  321 

the  prosperity  of  the  country,  notwithstanding  the 
small  sum  the  debtor  unjustly  retains  from  the  cred- 
itor. 

PORTABILITY. — In  a  simpler  age,  the  second  require- 
ment for  a  good  money  was  portability.  As  money  is 
constantly  changing  hands,  it  is  desirable  that  it  be 
-convenient  to  handle.  Paper  money  answers  this  re- 
quirement best  of  all,  since  it  is  so  easily  carried. 
The  portability  of  other  forms  of  money  is  not  of 
much  importance  to-day,  because  in  civilized  countries 
they  will  largely  be  replaced  l>y  paper.  Gold  certifi- 
cates are  now  frequently  seen,  which  say  on  their  face 

that  some  one  has  deposited dollars  in  gold  in  the 

United  States  treasury,  which  the  bearer  of  this  cer- 
tificate can  have  by  calling  for  it.  He  seldom  calls, 
because  it  is  more  convenient  to  hand  the  paper  out  in 
payment.  It  would  make  no  difference,  in  this  case, 
whether  we  consider  the  paper  or  the  gold  the  money, 
so  that  we  do  not  count  both.  But,  as  a  matter  of 
fact,  the  gold  is  the  money,  and  the  certificate  the 
evidence  of  title.  Payments  are  made  by  transfer- 
ring the  title  to  the  gold  from  hand  to  hand.  (This  is 
not  true  of  Government  notes,  called  greenbacks, 
which  are  not  certificates  of  deposit,  but  promises  to 
pay.)  An  iron  or  a  wheat  money  would  be  at  once 
represented  by  paper  certificates.  Purchasers  in  a 
civilized  country  would  not  carry  the  iron  about  with 
them,  but  would  store  it  in  a  warehouse  and  transfer 
the  title  by  a  certificate.  The  question  of  portability 
is  therefore  no  longer  of  great  consequence. 

This  has  a  bearing  on  the  use  of  Silver.     It  was 


322  EXCHANGE. 

formerly  claimed  that  a  silver  money  was  objectionable 
011  account  of  its  weight.  Even  gold  has  considerable 
weight,  but  both  it  and  silver  are  likely  to  be  repre- 
sented by  paper.  The  cost  of  storing  silver  is  no 
greater  than  that  of  gold  when  the  risk  of  theft  is 
taken  into  account,  because  no  great  value  of  silver 
can  be  carried  off  secretly.  It  is  an  admitted  prov- 
ince of  all  governments  to  coin  money.  It  is  but  a. 
step  to  storing  that  money  and  issuing  certificates  of 
title  to  be  transferred  from  hand  to  hand  in  place  of 
the  money  itself.  No  one  has  ever  objected  to  the  is- 
sue by  the  United  States  of  such  gold  certificates.  If 
silver  coin  were  the  only  money,  it  would  likewise  be 
thus  deposited  under  our  present  laws,  and  the  title 
to  its  ownership  transferred  in  ordinary  trade  by 
certificates.  The  question  of  portability,  therefore,, 
scarcely  enters  into  consideration. 

DURABILITY. — A  third  requisite  for  good  money  is 
durability.  It  is  important  that  money  shall  not  wear 
out  with  the  using,  or  deteriorate  with  keeping.  Gold 
wears  rapidly  by  the  using,  and  the  loss  must  be  borne 
in  the  end  by  some  one,  in  this  country  by  the  last 
user,  who  must  bear  the  whole  loss.  A  good  money 
must  not  deteriorate  by  storage  in  a  bank  vault,  or 
suffer  too  much  in  actual  use.  An  exception  is  to  be 
made  of  paper  money.  This  costs  so  little  to  print 
that  we  can  afford  to  wear  it  out  and  pay  the  expense 
of  replacing  the  bills  with  new.  Paper,  on  account  of 
its  portability,  convenience,  and  the  ease  with  which 
worn  notes  can  be  replaced,  is  certain  to  be  the  actual 
currency  which  passes  from  hand  to  hand  in  the  fu- 


MONEY.  323 

ture.  It  may  be  certificates  stating  that  coin  is  held 
subject  to  order,  or  it  may  be  notes  whose  redemption 
is  in  some  way  secured.  The  cost  of  "issuing  a  second 
gold  or  silver  certificate,  in  the  place  of  one  worn  out, 
is  trifling.  The  gold  and  silver  whose  title  is  trans- 
ierred  is  not  affected  thereby. 

There  are  other  desirable  qualities  of  money,  such 
;as  uniformity  and  divisibility.  Cattle  have  been 
used  as  money,  but  not  all  cattle  are  of  the  same 
grade,  and  the  debtor  will  seek  to  pay  in  the  poorest. 
Another  objection  to  cattle  is  the  lack  of  divisibility. 
An  ox  is  a  large  piece  of  money,  and  inconvenient  for 
small  purchases.  Paper,  of  course,  has  a  uniform 
value ;  one  note,  of  the  same  denomination,  is  as  good 
as  another  ;  and  issues  can  be  made  of  any  denomina- 
tion. 

The  cost  of  issuing  a  one-dollar  note  is  the  same  as 
one  for  a  hundred  dollars,  and  the  smaller  note  wears 
out  much  the  more  rapidly.  No  one  now  thinks  of 
using  paper  for  sums  smaller  than  one  dollar.  In  Eng- 
land the  smallest  note  issued  is  for  twenty-five  dol- 
lars, though  many  favor  the  issue  of  one-pound  notes. 
Efforts  in  this  country  to  withdraw  the  one  and  two 
dollar  bills  have  met  popular  objections,  but  it  would 
be  much  better  if  all  paper  currency  were  of  the  de- 
nomination of  five  dollars  and  over. 

Acceptability  is  usually  named  as  a  quality  of  good 
money,  but  it  is  this  that  makes  it  money.  Nothing 
is  money  that  is  not  generally  accepted,  and  anything 
which  is  generally  accepted  becomes  money,  though  it 
may  be  a  very  poor  money. 


324  EXCHANGE. 

It  is  worth  while  to  notice  the  difference  between 
paper  money  and  gold  and  silver  certificates.  Paper 
money  is  of  various  kinds.  It  has  sometimes  been  ir- 
redeemable on  demand,  though  with  an  expectation  of 
payment  in  the  future.  Our  present  paper  money  is. 
redeemable  on  demand  in  coin.  Here,  it  is  the  paper, 
and  not  the  coin  held  for  its  redemption,  that  consti- 
tutes the  money.  It  is  not  a  certificate  of  title  to  a 
given  quantity  of  gold  or  silver.  It  is  a  note,  and  the 
reserve  is  much  smaller  than  the  volume  of  the  cur- 
rency. In  estimating  the  amount  of  money  in  circu- 
lation, however,  we  should  not  count  the  specie  reserve 
for  paper  money,  since  while  it  is  held  as  a  reserve  it 
is  no  longer  used  as  money.  The  increase  in  the  cir- 
culation due  to  the  paper  is  only  the  difference  be- 
tween the  sum  of  the  paper  and  that  of  the  reserve. 
We  did  not  consider  gold  and  silver  certificates  as 
money  at  all,  because  it  is  understood  that  payment 
is  made  by  the  gold  and  silver  itself,  the  title  to  which 
passes  from  hand  to  hand.  This  is  not  true  of  paper 
money  which  exceeds  the  amount  of  its  specie  reserve. 
Of  course,  if  one  were  to  insist  on  considering  the  gold 
and  silver  certificates  as  money,  we  should  then  be 
driven  to  say  that  the  specie  to  which  they  are  the 
title  is  not  money.  The  paper  and  the  specie  reserve 
can  not  both  be  money,  since  the  currency  is  not  in- 
creased by  the  issue  of  the  certificates.  There  is  no- 
more  money  than  if  the  coin  itself  passed  from  hand- 
to  hand,  and  the  certificates  had  not  been  issued. 


MONEY.  325 

PART  II.     WHAT   DETERMINES  THE  VALUE  OF 
MONEY  ? 

We  have  seen  the  essential  quality  of  a  good  money 
is  that  it  shall  have  steadiness  of  value,  and  we  are 
unprepared  to  form  any  opinion  about  the  stability  of 
any  form  of  money  until  we  knqw  the  causes  on  which 
its  value  depends. 

The  value  of  money  depends  on  supply  and  de- 
mand. Gold  and  silver  have  values  for  ornament, 
and  for  plate.  If  neither  were  used  as  money,  there 
would  be  demand  for  all  the  gold  and  silver  of  the 
world,  but  at  lower  values.  Let  us  suppose  that  gold 
is  worth  five  dollars  an  ounce.  Now,  let  it  suddenly 
be  adopted  as  money,  and  a  hundred  million  ounces 
be  required  for  the  money  purpose.  Would  not  this 
new  demand  rapidly  raise  the  value  ?  It  might 
double  it.  It  might  make  it  ten  times  as  great.  The 
increase  of  the  value  of  gold  could  increase  production 
only  to  an  irregular  extent.  If  gold  were  raised  as 
wheat,  the  new  demand  would  have  very  little  perma- 
nent effect,  since  double  the  quantity  of  wheat  could  be 
produced  at  very  little  increase  of  cost.  But  gold  is 
not  regularly  produced.  The  amount  accessible  on 
the  earth  is  limited.  An  increase  in  the  value  would 
cause  the  working  of  some  mines  which  were  before 
unprofitable,  but,  at  even  ten  times  the  price,  the  in- 
crease in  the  amount  to  be  had  is  not  great.  The 
value  of  gold  is  fixed  rather  by  the  rules  of  monopoly, 
since  the  quantity  is  limited.  The  value  of  gold  will 
therefore  be  determined  by  the  balance  between  the 


326  EXCHANGE. 

demand  for  all  purposes,  and  the  supply.  Gold  has 
one  peculiarity.  Being  desired  for  ornament,  the  de- 
mand may  fce  greater  at  a  high  price  than  at  a  low 
price.  If  it  were  worth  less  than  silver,  it  would  be 
discarded  by  many  persons  who  now  use  it  simply  be- 
cause its  cost  prevents  its  being  too  common.  The 
more  valuable  it  becomes,  the  more  attractive  it  is  to 
them,  and  hence  the  demand  may  even  increase  with 
the  increase  in  value.  How  much  effect  the  demand 
for  use  as  money  has  on  the  value  of  gold,  no  one  can 
estimate.  It  could  be  shown  only  by  the  general  de- 
monetization of  the  metal  by  all  nations. 

The  value  of  silver  is  governed  by  the  same  laws  as 
that  of  gold,  with  the  exception  that  the  product  of 
silver  can  be  more  easily  increased.  There  exist  vast 
quantities  of  silver-bearing  rock  of  too  low  grade  to 
work  with  profit.  If  the  price  were  greatly  increased, 
the  output  would  also  increase.  The  demand  for 
silver  to  use  as  money  is  one  of  the  demands  which 
give  it  value.  Were  it  demonetized  by  all  nations,  its 
value  would  sink  precisely  as  would  that  of  gold. 

Paper  is  the  only  remaining  form  of  money  neces- 
sary to  consider.  What  gives  value  to  paper  which 
can  be  printed  at  a  nominal  cost  ? 

1.  The  anticipation  of  redemption,  either  on  pre- 
sentation or  in  the  future.  If  the  promise  is  to  pay  on 
demand,  in  coin,  and  the  paper  is,  in  fact,  redeemed 
over  the  counter  of  the  bank  without  hesitation  or 
trouble  to  the  holder,  it  is  worth  as  much  as  the  coin. 
Even  if  specie  payment  be  suspended,  and  there  is  a 
general  confidence  that  the  note  will  be  paid  at  some 


MONEY.  327 

future  time,  it  is  worth  its  face,  less  such  discount  as 
the  general  opinion  may  fix  for  the  risk  and  delay. 
This  was  the  condition  of  treasury  notes  for  some 
years  after  the  war.  There  was  full  confidence  that 
at  some  time  they  would  be  redeemed  in  specie. 

2.  The  quantity  in  circulation.  The  value  of 
everything  is  fixed  by  supply  and  demand.  If  there 
were,  or  could  be,  no  money  but  paper,  it  would  be 
given  a  value  by  the  demand  for  money.  The  larger 
the  supply,  the  lower  the  value. 

PAPER  MONEY  REDUCES  THE  VALUE  OF  GOLD 
AND  SILVER. — A  paper  money  increases  the  total 
supply  of  money.  It  is  the  same  as  an  increase  in  the 
supply  of  gold  and  silver,  which,  of  course,  reduces 
their  value.  The  value  of  gold  depends  on  the  sup- 
ply and  demand  for  all  purposes ;  if  paper  is  substi- 
tuted for  one  of  its  uses,  the  effect  is  the  same  as  an 
increase  in  the  supply  of  gold. 

FIAT  MONEY. — A  paper  money  of  altogether  a  dif- 
ferent character  has  been  the  subject  of  some  discus- 
sion in  the  United  States.  It  is  merely  stamped 
paper,  with  no  promise  of  redemption.  Would  such  a 
paper  be  money,  and,  if  so,  what  would  determine  its 
value  ?  Whether  it  would  be  money  or  not,  depends 
on  whether  it  would  come  into  general  circulation.  If 
the  treasury  were  to  issue  paper  on  which  is  printed, 
*'  This  is  a  dollar,"  it  would  be  money  if  it  were  volun- 
tarily accepted  in  payment  by  every  one.  It  could  be 
given  forced  circulation  at  the  first,  by  enacting  that 
it  be  received  in  payment  for  debts,  and  by  govern- 
ment officials  for  their  salaries.  If  such  a  law  were 


328  EXCHANGE. 

sustained  by  the  courts,  the  creditor  would  have  no 
redress,  even  though  the  paper  were  worthless  and  his 
claims  were  confiscated.  The  government  official 
would  have  the  choice  of  acceptance  or  resignation. 
But  this  would  not  make  it  money.  The  test  of 
money  is  its  voluntary  reception  by  those  who  have 
something  to  sell.  If  the  people  should  take  it,  it- 
would  be  money;  otherwise,  not. 

If  it  were  accepted  by  the  people,  what  would  deter- 
mine its  value  ?  The  amount  issued,  and  the  extent 
to  which  it  should  be  used  in  exchanges.  If  it  re- 
placed all  other  money,  and  were  accepted  by  every 
one,  it  would  be  worth  nearly  the  sum  named  on  ita 
face,  as  long  as  its  issues  were  small.  There  is  a 
demand  for  a  certain  volume  of  currency.  There 
would  be  nothing  to  replace  this  stamped  paper,  ex- 
cept coin,  which  costs  as  much  as  the  face  of  the 
paper.  As  there  is  a  demand,  and  the  supply  is 
limited,  there  is  no  reason  why  it  should  depreciate 
in  value.  As  soon  as  the  supply  became  excessive, 
its  value  would  decrease.  The  more  issued,  the  less 
it  would  be  worth.  If,  at  any  time,  people  refused  to 
receive  it,  and  substituted  something  else,  the  demand 
would  be  so  much  reduced,  and  its  value  so  much 
lower.  In  case  of  a  panic  and  a  general  refusal,  it 
would  instantly  become  worthless. 

The  nearest  approach  to  this  kind  of  money,  of  late 
years,  was  the  Confederate  currency.  This,  to  be 
sure,  was  a  promise  to  pay,  and  was  first  received  by 
the  people  with  the  expectation  that  it  would  be  re- 
deemed. That  expectation  never  quite  vanished  as 


MONEY.  329 

long  as  the  money  circulated  at  all;  yet  the  issues 
were  so  excessive,  and  the  expectation  of  redemption 
so  slight,  as  practically  to  give  it,  toward  the  end,  the 
character  of  mere  stamped  paper.  It  was  received 
because  there  was  nothing  else.  It  was  necessary  to 
have  some  medium  for  exchange,  and  this  necessity 
gave  it  a  trifling  value. 

It  is  hardly  reasonable  to  suppose  that  stamped 
government  paper — -fiat  money,  as  it  has  been  called 
— could  gain  a  circulation  in  the  United  States.  Sell- 
ers would  not  voluntarily  receive  it.  If  it  were  once 
in  circulation,  and  the  habit  of  receiving  it  formed,  a 
very  limited  amount  might  hold  its  value  for  a  time. 
But  it  would  be  a  money  very  dangerous  to  stability, 
and  in  a  panic  the  loss  in  the  derangement  of  business 
would  be  many  times  the  cost  of  coin  which  would 
have  filled  its  place. 

Stamped  paper  is  not  to  be  confused  with  paper 
money  redeemable  in  something  else  than  coin,  or 
even  redeemable  at  some  future  time.  A  paper 
money  redeemable  in  interest-bearing  bonds  would, 
of  course,  be  worth  as  much  as  the  bonds.  Several 
such  schemes  have  been  proposed,  but  there  are  dif- 
ficulties in  the  way.  Such  paper  money  would  have 
the  value  of  specie,  as  long  as  its  issue  was  not  ex- 
cessive, even  though  the  interest-bearing  bonds  should 
fall  considerably  below  par.  The  reason  for  the  fall 
in  the  value  of  the  bonds  would  be  the  fact  that 
higher  interest  could  be  obtained  in  other  investments. 
The  demand  for  the  money  redeemable  in  them  would, 
as  long  as  the  supply  was  not  excessive,  keep  its  value 


330  EXCHANGE. 

up  to  the  cheapest  thing  which  could  take  its  place, 
which  is  gold  or  silver  coin.  If  the  volume  issued 
were  greater  than  the  amount  of  coin  which  would 
otherwise  be  in  use,  the  money  would  depreciate,  be- 
cause the  supply  would  be  greater  than  the  demand. 
The  money  could  not  fall  below  the  coin  value  of  the 
bonds.  If  the  interest-bearing  bonds  were  to  rise 
above  par,  the  currency  would  at  once  be  exchanged 
for  bonds,  and  its  place  would  be  taken  by  gold  and 
silver  coin. 


PART  III. — How   CAN   WE   SECUKE  A  MONEY  OF 
UNIFORM  VALUE  ? 

This  is  the  important  quality  of  a  good  money. 
There  are  many  who  advocate  gold  as  a  standard. 
But  the  changes  in  the  value  of  gold  are  very  great, 
though  not  usually  very  sudden.  By  the  values  of 
any  money  we  mean  how  much  it  will  purchase  in  the 
commodities  in  daily  use  by  the  people,  either  directly, 
or  indirectly — as  steel  is  purchased  to  build  railroads 
to  carry  grain  and  manufactured  goods.  The  fluctua- 
tions of  gold  are  still  further  increased  by  the  action 
of  governments.  Nearly  all  the  annual  production  of 
gold  is  now  required  for  use  in  the  arts ;  and  a  larger 
or  smaller  demand  for  use  as  money  tends  to  rapidly 
increase  or  decrease  the  value  of  the  metal.  When 
the  United  States  resumed  specie  payments,  it  was 
compelled  to  draw  large  quantities  of  gold  from 
Europe.  This  increased  demand  could  not  help  in- 
creasing the  value  of  the  metal,  and  thus  lowering  the 


MONEY.  331 

price  of  goods.  When  Germany  adopted  a  gold  stand- 
ard, the  effect  was  in  the  same  direction.  France 
has  since  been  accumulating  gold.  The  Austro-Huii- 
garian  empire  is  now  seeking  to  establish  a  gold  basis 
for  its  currency.  This  bidding  of  all  nations  for  gold 
as  a  reserve  for  currency  can  not  fail  to  increase  its 
value — its  price  as  measured  by  goods.  If  all  the 
silver-using  nations  were  to  adopt  a  gold  standard  for 
their  currency,  it  would  send  the  values  of  gold  up, 
nobody  knows  how  far,  certainly  to  double  those  at 
present. 

THE  TABULAR  STANDARD. — For  many  years  econ- 
omists have  seen  that  this  is  the  only  honest  standard 
of  value.  It  has  been  proposed  to  take  the  wholesale 
prices  of  a  certain  number  of  commodities,  from 
month  to  month,  and  year  to  year.  These  should  in- 
clude all  the  articles  which  enter  largely  into  the  satis- 
faction of  the  wants  of  the  great  majority  of  the  peo- 
ple. One  hundred  articles  would  perhaps  give  a  fair 
average  result.  These  articles  would  be  taken  in  the 
proportion  of  the  values  produced  each  year.  Let 
us  see  how  much  a  dollar  will  buy  of  all  of  these 
hundred  articles  on  the  first  day  of  July,  1893,  and 
let  this  be  the  standard  forever  after.  A  thousand 
dollars  is  the  quantity  of  these  goods  which  a  thou- 
sand dollars  of  our  present  money  will  now  purchase. 
Here  is  strict  justice — justice  to  the  debtor,  justice  to 
the  creditor.  A  dollar  represents  a  certain  quantity 
of  the  world's  resources.  If  one  lends  it  to-day ,, 
when  the  dollar  is  repaid,  ten  years  hence,  it  should 
buy  just  as  much,  no  more,  no  less,  than  when  he 
lent  it. 


332  EXCHANGE. 

On  account  of  imagined  difficulties  in  using  a 
money  of  this  kind,  it  has  been  proposed  to  continue 
the  use  of  our  gold  and  silver  and  paper  as  at  pres- 
ent, and  to  employ  the  standard  only  for  correction 
once  each  year,  or  term  of  years ;  to  ascertain  how 
much  a  dollar  will  buy  each  day  in  the  year,  and 
take  the  average,  at  the  end  of  another  year,  to  see 
whether  it  buys  more  or  less,  and  increase  or  reduce 
the  amount  of  all  promised  payments  accordingly. 

A  better  way  would  be  to  use  the  standard  itself. 
Suppose  the  United  States  were  to  issue  treasury 
notes,  payable  in  gold  or  silver,  it  being  specified 
that  a  thousand  dollars  is  as  many  grains  of  gold  or 
silver  as  will  buy  certain  quantities  of  one  hundred 
named  articles  at  wholesale  prices,  the  amount  to  be 
announced  from  month  to  month  by  the  statistical  of- 
fice. The  wages  of  labor  should  be  included  among 
other  things  which  money  will  buy.  Every  merchant 
in  the  world  would  have  an  interest  in  preventing  an 
error  of  a  fraction  of  a  cent,  and  we  may  assume  that 
the  reports  would  be  accurate.  This  would  be  good 
money.  It  would  be  paper  money,  the  most  conven- 
ient form ;  its  value  would  be  the  same  from  month  to 
month,  and  from  age  to  age.  It  could  not  be  issued 
in  excess,  because  any  excess  would  be  returned  for 
redemption  in  gold.  Very  little  would  be  redeemed, 
mostly  for  those  who  wished  the  gold  for  export,  but 
the  certainty  of  redemption  on  presentation  would 
give  value  to  the  entire  issue.  One  would  not  know 
how  many  grains  of  gold  will  be  paid  in  redeeming 
a  thousand-dollar  bill  a  year  hence;  but  he  would 


MONEY.  833 

know  that  a  quantity  will  be  paid  which  will  buy 
just  as  much,  and  no  more,  in  the  world's  markets, 
as  the  quantity  of  gold  which  would  be  paid  to-day. 

The  difficulty  with  the  Tabular  Standard  is  that  it 
is  not  easy  of  comprehension,  except  by  those  of  some 
education  and  intellectual  habits.  It  is  not  an  easy 
system  to  popularize. 

BIMETALLISM. — Next  to  the  Tabular  Standard,  the 
most  practical  plan  for  lessening  the  fluctuation  in  the 
value  of  money  is  bimetallism. 

Bimetallism  is  using  both  gold  and  silver  at  a  given 
ratio  of  weight.  The  theory  is  that  by  permitting  the 
use  of  either  metal,  the  cheaper  will  be  coined  until 
the  Increased  demand  for  it  raises  its  value  to  that  of 
the  other.  It  is  not  expected  that  the  metals  will  fall 
apart  at  all,  but  that  if  the  supply  of  one  increase 
more  rapidly  than  that  of  the  other,  it  will  be  coined 
the  more  rapidly. 

Suppose,  now,  that  the  leading  commercial  nations 
agree  that  they  will  coin  all  the  gold  and  silver 
brought  to  their  mints,  free,  at  an  established  ratio, 
say  one  ounce  of  gold  into  the  same  number  of  dollars 
as  twenty -four  ounces  of  silver.  This  means  that  they 
must  use  gold  and  silver  in  such  proportions  as  may 
be  necessary  to  maintain  their  values  at  the  standard 
ratio.  If  the  price  of  one  metal  for  a  time  rules  so 
high  that  none  of  it  comes  to  the  mint,  these  nations 
increase  their  currency  only  by  means  of  the  other. 
In  an  extreme  case,  the  coins  of  the  dearer  metal 
would  be  melted  up  for  use  in  the  arts.  Nations 
which  agree  to  bimetallism  must,  of  course,  be  pre- 


334  EXCHANGE. 

pared  to  go  to  the  length  of  using  either  gold  or  sil- 
ver exclusively,  if  necessary  to  maintain  the  ratio  ;  but 
this  would  never  happen  with  a  number  of  commercial 
nations  in  the  league. 

The  more  nations  in  such  a  league  the  stronger. 
No  league  could  maintain  a  ratio  beyond  the  market 
value  of  either  metal  if  it  were  wholly  demonetized  ; 
but  if  either  metal  were  wholly  demonetized,  its  value 
would  probably  sink  to  less  than  half  that  at  present, 
so  that  the  limits  within  which  bimetallism  could  be 
maintained  by  a  union  of  all  the  nations  in  the  world 
are  pretty  wide.  The  ratio  which  should  be  selected 
is  that  which  would  cause  the  use  of  both  metals,  and 
of  about  an  equal  value  of  each.  Any  tendency  of 
either  metal  to  fall  will  then  be  counteracted  by  its 
increased  use,  and  by  a  less  use  of  the  other.  The 
two  metals  would  be  coined  in  such  proportion  as 
would  maintain  their  values  at  the  ratio  fixed  for  their 
free  coinage.  The  only  way  to  increase  the  value  of 
either  metal  is  to  use  more  of  it ;  and  the  way  to  de- 
crease the  value  of  a  metal  is  to  use  less  of  it. 

This  would  be  a  real  double  standard,  and  not  an 
alternating  standard  as  some  monometallists  would 
have  us  believe. 

If  the  United  States,  or  any  single  nation,  were 
now  to  open  its  mints  to  the  free  coinage  of  silver,  it 
should  be  at  some  ratio  not  far  from  the  market  ratio 
of  the  metals — at  present  about  25  to  1.  It  would 
then  have  only  future  fluctuations  to  deal  with. 

The  object  of  bimetallism  is  to  limit  the  fluctuations 
in  the  value  of  money. 


CHAPTER  IX. 

SUBSTITUTES  FOR  MONEY. 

There  are  substitutes  for  money,  which  save  the  use 
of  money  itself.  They  are  not  money,  because  they 
are  not  generally  received  by  every  one  for  anything 
he  has  to  sell ;  they  are  not  in  general  circulation. 

1.  Bank  Checks. — The  substitute  which  most  read* 
ily  occurs  to  every  reader  is  bank  checks.  These  are 
not  in  general  circulation ;  they  usually  make  but  one 
payment  each  before  being  returned  to  the  bank. 
They  are  not  accepted  in  complete  payment,  being 
merely  an  order  to  a  bank  to  pay  the  money.  If  the 
bank  pays,  well ;  if  it  refuses  the  check,  the  drawer  is 
liable.  Neither  is  their  use  general,  but  it  is  confined 
to  a  limited  class.  Even  a  large  manufacturing  estab- 
lishment does  not  pay  its  employes  in  checks,  but  in 
money.  It  pays  other  business  firms  by  means  of 
checks. 

Although  bank  checks  are  not  money,  they  save  the 
use  of  money.  Each  check  saves  one  payment.  If  it 
were  possible  for  every  person  to  use  checks  and  make 
all  payments  with  them,  the  only  use  for  money  would 
be  as  a  bank  reserve. 

The  advantage  of  saving  the  use  of  money  depends 

on  whether  we  mean  gold  and  silver,  or  paper  money. 

To  save  gold  and  silver  is  to  release  them  for  other 

purposes.     The  cost  of  a  metallic  currency  is  the  in- 

22  ( 335 ) 


336  EXCHANGE. 

terest  on  its  volume.  The  cost  of  paper  money  is 
only  the  printing — not  much  more  than  that  of  bank 
checks.  The  reserve  for  checks  should  probably  be  as 
great  as  for  paper  money,  so  there  is  no  great  saving 
in  a  general  substitution  of  checks  for  paper  money. 
They  prevent  theft,  are  cleaner  to  handle,  furnish  a 
record  of  transactions,  and  are  more  desirable  in 
many  ways  for  a  considerable  number  of  people. 

2.  Boole  Accounts. — The  real  substitute  for  money 
is  book  accounts.  Bank  checks  are  only  a  part  of  a 
system  of  book-keeping  by  which  accounts  are  kept 
between  the  depositors  of  the  bank ;  and,  through  the 
clearing-house  (the  bank  of  banks),  between  the  de- 
positors of  all  banks.  The  simplest  form  of  book  ac- 
counts, as  a  substitute  for  money,  is  that  of  a  country 
store.  Let  us  suppose  a  farmer,  who  gets  pretty 
much  all  his  family  uses — groceries,  dry  goods,  cloth- 
ing— at  this  store.  The  goods  are  charged  to  him. 
He  sells  his  wheat,  wool,  butter,  eggs,  to  this  store, 
receiving  credit  for  them.  There  is  a  settlement,  per- 
haps once  a  year,  at  which  the  balance  is  either  paid 
in  cash,  or  carried  over  to  begin  another  year.  No 
money  need,  therefore,  be  used  between  these  parties ; 
the  book  account  is  a  substitute.  In  this  country 
store  the  exchanges  are  made  directly,  and  without  the 
intervention  of  money.  Its  only  use  is  a  measure  of 
value.  The  farmer  does  not  know  exactly  what  he 
will  want  in  exchange  for  the  load  of  wheat.  He 
trades  it  for  his  choice  of  anything  in  the  store,  to  be 
delivered  when  he  is  ready  for  it.  As  he  measures 
the  quantity  of  wheat  by  a  pound  weight,  and  the 


SUBSTITUTES   FOR   MONEY.  337 

wood  he  sells  by  the  cord,  so  lie  measures  the  value  of 
this  wheat  by  the  dollar  value.  It  is  agreed  between 
him  and  the  merchant  that,  in  exchange  for  this 
wheat,  he  shall  have  the  value  of  a  certain  number  of 
dollars  in  goods.  He  gets  the  goods  for  the  wheat. 
The  important  thing  to  him  is  that  the  dollar  measure 
shall  not  stretch.  He  does  not  want  the  goods  to  rise 
in  price  after  he  has  sold  his  wheat. 

If  the  reader  is  curious  to  see  how  the  system  of 
exchange  by  book-keeping  is  extended  beyond  the 
country  store,  he  is  referred  to  almost  any  good  de- 
scription of  banking.  The  merchant  buys  his  goods 
without  money,  and  an  account  is  made  of  them.  He 
ships  the  country  produce  he  takes  in  exchange  to 
various  business  firms.  They  give  him  an  order 
(check)  on  a  bank  for  the  value ;  he  transfers  this 
•order  (directly  or  indirectly)  to  the  men  of  whom  he 
bought  the  goods.  He  probably  divides  it  up  by 
sending  the  orders  (checks)  he  receives  to  his  own 
bank,  having  it  make  a  book  account  of  them ;  and 
then  gives  his  own  order  (check)  to  the  men  of  whom 
he  buys  goods,  and  the  bank  keeps  the  account.  He 
may  not  handle  a  dollar  bill  in  the  whole  transaction. 
He  sells  the  farmer  goods,  without  money.  He  buys 
the  farmer's  produce,  without  money.  He  sells  the 
produce  to  a  dozen  men,  and  gets  no  money.  He  buys 
his  stock  of  goods  of  various  firms,  and  pays  no 
money.  It  is  trade  all  the  way  through ;  and  the 
l>anks  keep  the  account,  on  the  orders  (checks)  of  the 
parties,  as  they  agree  on  the  terms  of  each  trade. 
The  wholesaler  buys  of  the  manufacturer  without 


338  EXCHANGE. 

money,  and  turns  over  the  orders  he  has  received  from 
the  retailer.  Even  international  exchanges  are  man- 
aged by  a  system  of  book-keeping.  When  money  is 
paid,  it  is  gold  or  silver,  and  the  shipment  of  one  per 
cent,  of  the  exchanges  in  gold  excites  comment  in  the 
newspapers.  The  large  transactions,  the  great  busi- 
ness of  the  world,  are  done  by  book-keeping,  and  not 
by  money.  One  reason  for  this  is  the  danger  that 
large  sums  of  money  would  be  lost  or  stolen. 

The  .reader  may  by  this  tune  wonder  if  money  is- 
used  at  all.  It  comes  in  for  the  smaller  payments. 
The  factory  sells  its  goods  for  a  book  account,  but  it 
pays  its  workmen  in  money.  Such  country  stores  a& 
have  been  described  exist,  but  there  are  more  which 
sell  for  cash.  The  traveler  pays  in  money.  He  can, 
not  give  a  check  for  his  hotel  bill  or  railway  fare. 
Most  of  the  smaller  transactions  of  life,  especially  be- 
tween strangers,  are  settled  in  cash.  There  is  usually 
a  balance  on  settlement  of  book  accounts,  which  is 
often  paid  in  cash.  Then  a  vast  sum  of  real  money 
is  required  as  a  "  reserve,"  to  make  good  all  the  de- 
mands for  cash  that  arise  in  this  complicated  business. 

All  substitutes  lessen  the  demand  for  money  itself ; 
and,  hence,  lower  its  value.  If  substitutes  took  the 
place  of  all  the  money  of  the  world,  the  value  of  gold 
and  silver  money  would  sink  to  what  the  demand  for 
use  in  the  arts  would  give.  The  money  demand  for 
gold  and  silver  now  keeps  their  value  far  above  this* 
point.  Were  it  not  for  the  substitutes,  and  for  paper 
money,  the  value  of  gold  would  be  several  times  as. 
high  as  at  present. 


SUBSTITUTES   FOR   MONEY.  339 

3.  Credit.  —  Credit  has  been  treated  by  some 
^writers  as  a  mystic  thing,  and  by  others  as  a  material 
commodity  like  iron  or  gold  or  silver.  Like  most 
other  popular  terms,  it  has  several  significations. 
One  is  said  to  have  credit  at  a  bank  so  long  as  he  has 
money  deposited  there  ;  that  is,  his  credit  is  simply 
his  own  money  left  at  a  bank  for  convenience.  But 
what  is  meant  by  credit  in  the  ordinary  sense,  is 
rather  the  extent  to  which  one  can  borrow  money,  or 
the  extent  to  which  he  can  purchase  goods  without 
paying  for  them  on  delivery,  the  sums  for  which  he 
can  "  get  trusted." 

The  sooner  we  understand  that  credit  is  nothing 
more  than  the  willingness  of  people  to  give  goods  to 
a  purchaser  on  his  promise  to  give  something  in  ex- 
change for  them  in  the  future,  the  better.  Their  will- 
ingness is  his  credit.  The  exchange  is  not  completed. 
One  side  transfers  its  goods;  the  other  promises  to 
transfer  the  agreed  equivalent  in  the  future.  Whether 
one  will  or  not,  is  a  matter  of  opinion.  Is  he  honest  ? 
Will  he  be  able  ?  Can  he  be  compelled  ?  His  credit 
depends  on  the  answers  to  one  or  all  of  these  ques- 
tions. One's  credit  can  not  be  more  than  the  esti- 
mate of  his  ability  to  pay  in  the  future  ;  it  is  likely 
to  be  much  less.  His  ability  to  pay  can  not  be 
greater  than  the  wealth  that  he  now  has,  with  its  nat- 
ural increase,  plus  the  results  of  his  labor  power,  plus 
the  goods  furnished  him  on  credit.  It  is,  of  course, 
possible  that  one  may  be  able  to  give  back  all  he  has 
borrowed,  if  he  preserves  the  goods  or  uses  them 
without  loss.  He  may  also  give  the  results  of  his 


340  EXCHANGE. 

labor,  less  the  cost  of  his  living ;  and  if  he  has  any 
wealth  of  his  own  at  the  time  of  incurring  the  debtr 
he  may  preserve  it  until  the  time  of  payment.  In 
debating  whether  they  will  trust  a  man,  people  ascer- 
tain— 

1.  What  he  is  worth,  how  much  property  he  now 
has,  and  estimate  the  likelihood  of  his  taking  care  of 
it.     If  he  has  "  made  it  "  himself,  or  has  taken  care 
of  it  without  loss  for  some  years,  he  may  be  expected 
to  have  it  at  the  time  for  payment  of  what  he  pro- 
poses to  borrow ;  and  he  will  probably  have  credit  to- 
the  extent  of  a  certain  part  of  it.     If  the  property  is- 
of  such  a  nature  that  he  can  give  legal  security  on  it, 
so  that  he  can  be  compelled  to  sell  it  for  the  purpose 
of  payment,   he  is   still  more   likely  to  have   credit- 
But  as  few  people  wish  to  resort  to  legal  enforcement,, 
one's  credit  will  also  be  affected  by  his  reputation  for 
honesty,  and  the  likelihood  that  he  will  pay  without 
trouble.       A  rough   popular  estimate  of  one's  credit 
from  this   source   is  usually   something  like   half  of 
what  his  property  is  worth. 

2.  But  if  goods  are  given  on  one's  promise  to  pay, 
he  has  the  goods,  and  may  naturally  be  expected  to 
have  them,  or  their  results,  at  the  time  of  payment^ 
It  is  possible,  therefore,  for  one  who  has  no  property 
at  all  to  have  credit  which  consists  of  his  reputation 
and    estimated   power  of   labor   and  management    of 
business.     If  people  generally  believe  a  man  is  honest, 
and  that  he  has  the  power  of  managing  property  so- 
as  to  make  it  bring  the  largest  returns,  he  may  have- 
credit  to  an  almost  unlimited  extent.     For  the  goods* 


SUBSTITUTES   FOR   MONEY.  341 

loaned  him  are  security,  no  matter  how  large  their 
amount  may  be.  If  people  believe  him  to  be  the  man 
we  have  described,  they  believe  he  will  have  the 
means  of  payment  when  the  time  comes.  So  that  the 
extent  of  one's  credit  from  this  source  is  almost  un- 
limited, and  depends  entirely  on  his  good  name. 

3.  There  is  a  third  source  of  credit,  which  is 
merely  one's  labor  power,  independent  of  the  man- 
agement of  money  loaned.  A  merchant  will  some- 
times advance  a  man  food  and  other  means  for  the 
support  of  his  family,  although  he  has  no  property, 
and  the  goods  are  to  be  consumed  at  once.  The 
credit  of  the  man  in  this  case  is  his  labor  power. 
He  may  be  working  a  rented  farm,  and  the  mer- 
chant believe  he  will  pay  when  the  crop  matures. 
He  may  be  working  for  wages,  and  will  pay  when  he 
receives  them.  He  may  be  going  a-fishing,  and  will 
pay  from  his  catch.  This  kind  of  credit  is  not  usu- 
ally given  for  large  sums,  though  the  aggregate  in 
the  United  States  is  very  great. 

The  credits  by  which  the  business  of  the  world 
is  chiefly  carried  on  belong  mainly  to  the  second 
class  named.  The  manufacturer  can  not  sell  his 
goods  directly  to  the  consumer.  The  goods  are  not 
wanted  as  fast  as  produced.  No  one  knows  just  who* 
will  want  a  particular  article,  nor  when  he  will  want; 
it.  A  reserve  stock  must  be  carried  somewhere ;  and: 
it  should  be  where  the  consumer  can  easily  find  it> 
and  examine  it  when  he  thinks  of  purchasing.  The 
manufacturer  turns  the  goods  over  to  the  merchant 
to  sell.  The  latter  might  sell  them  on  commission, 


342  EXCHANGE. 

but  this  plan  has  not  been  found  to  work  well  for 
most  lines  of  goods.  The  manufacturer  therefore  sells 
the  goods  to  the  merchant,  the  latter  agreeing  to  pay 
for  them  at  about  the  time  he  hopes  to  have  sold  them. 
Now,  if  the  merchant  is  honest  and  competent,  it  is 
safe  to  let  him  have  as  many  goods  as  he  is  likely 
to  sell.  When  he  sells  the  goods  he  will  have  the 
money.  He  may  steal  it,  may  use  it  in  his  living 
expenses ;  but,  if  he  is  the  right  sort  of  man,  he  will 
do  neither  of  these  things,  and  will  have  enough  to 
pay  for  the  goods  at  their  sale.  Manufacturers  real- 
ize the  situation,  and  it  is  not  uncommon,  when  in 
the  clothing  line  for  instance,  there  has  been  a  warm 
winter  so  that  the  merchant  could  not  sell  the  goods, 
to  "  carry  him  over  " — that  is,  to  give  him  time  for 
payment  until  he  can  sell  them.  The  extent  of  a 
merchant's  credit  is  thus  the  amount  of  goods  he 
can  obtain  on  the  promise  to  pay  in  the  future. 
With  the  right  sort  of  man  the  goods  may  be  suf- 
iicient  security,  and  there  are  young  business  men 
iwho  have  large  credit  on  no  other  basis. 

But  the  seller  also  looks  to  see  what  property  the 
:merchant  owns,  or  what  other  means  of  payment  he 
lias,  so  that  his  credit  usually  rests  partly  on  the  first 
Tbasis  named.  The  seller  also  looks  to  the  probability 
of  the  purchaser  being  able  to  use  the  goods  profit- 
ably, either  as  a  merchant  in  selling,  or  as  a  manu- 
facturer in  further  production.  A  business  man  often 
has  credit  "for  anything  he  needs  in  his  business," 
but  for  nothing  more.  A  manufacturer  or  wholesaler 
will  let  one  have  all  the  goods  he  thinks  he  can  dis- 


SUBSTITUTES   FOE  MONEY.  343 

pose  of  within  the  time  of  payment;  but  he  would 
not  furnish  money  for  living  expenses,  speculation,  or 
for  other  uses.  Indeed,  we  should  make  a  broad  dis- 
tinction between  the  credit  of  men  engaged  in  busi- 
ness, by  which  they  obtain  materials  for  use  in  their 
business,  and  credit  for  articles  for  unproductive  con- 
sumption, credit  for  living  expenses. 

The  form  of  credit  mentioned  first  under  this  head, 
is  distinct  from  both  of  these.  Money  is  there  loaned 
on  the  property  one  has,  as  by  a  mortgage  on  a  farm ; 
and  the  disposition  of  the  money  or  goods  loaned  is 
not  of  so  much  consequence,  since  payment  is  sure  in 
any  case.  Banks  are  supposed  to  deal  mainly  with 
the  second  class  of  credits.  When  the  manufacturer 
has  sold  the  merchant  goods  to  be  paid  for  some 
months  hence,  the  bank  buys  the  account,  takes  the 
place  of  the  manufacturer,  and  receives  the  payment 
from  the  purchaser.  It  does  this  partly  on  the  faith 
that  the  goods  are  in  existence,  and  when  returns 
come  from  them  the  notes  will  be  paid.  Banks  dis- 
like to  deal  in  accommodation  paper,  which  is  not 
given  for  goods. 

Credit,  therefore — any  particular  individual's  credit 
— depends  on  other  people's  opinion,  not  only  of  the 
value  of  the  property  he  has,  but  of  the  man  himself. 
This  opinion  is  likely  to  change,  and  may  change  sud- 
denly. In  a  panic,  when  all  persons  are  frightened, 
confidence  in  one's  ability  to  pay  may  be  destroyed. 
One's  credit  may  expand,  or  shrink  to  nothing  with- 
in a  few  days,  and  that  through  no  fault  of  his  own, 
and  for  no  good  reason.  Credit  is  the  opinion  of  the 


344  EXCHANGE. 

people,  and  the  people  are  fickle.  It  depends  on  the 
laws  of  the  human  mind.  Even  though  the  person 
who  furnishes  the  goods  has  full  confidence  in  the 
ability  of  the  second  party  to  pay,  the  opinion  of 
others,  and  even  of  the  populace,  may  make  it  unsafe 
to  give  credit. 

The  credit  of  any  person  is  therefore  an  uncertain 
and  a  variable  quantity,  depending  on  many  causes, 
some  of  which  it  is  impossible  to  foresee;  and  if  we 
were  to  conceive  of  such  a  thing  as  the  total  credit  of 
all  people,  it  would  be  now  of  vast  proportions,  and 
now  shrink  to  a  small  fraction  of  what  it  was  before. 

The  term  "  credits  "  is,  however,  often  used  to  de- 
note credits  already  extended ;  and  then  means  the 
value  of  the  goods  which  have  been  transferred  from 
one  party  to  another  on  his  promise  to  pay,  the  ex- 
change being  incomplete.  More  than  one  credit  in 
this  sense  may,  therefore,  be  based  on  the  same  goods. 
The  manufacturer  sells  goods  to  the  wholesale  mer- 
chant ;  the  exchange  is  incomplete,  and  credit  has- 
been  given  for  their  value.  The  wholesaler  sells  ta 
the  retailer  on  credit ;  here  credit  has  been  extended 
to  twice  the  value  of  the  goods — that  is,  there  may  be 
notes  out,  based  on  these  goods,  to  twice  their  value. 
As  a  matter  of  fact,  the  goods  and  credits  have  only 
been  transferred  to  second  parties.  It  is  expected 
that  the  proceeds  of  their  final  sale  will  pass  from 
hand  to  hand  back  to  the  original  producer. 

The  advantage  of  credit  is  that  it  puts  goods  into- 
the  hands  of  those  who  can  use  them  with  the  greatest 
profit.  Without  it,  those  who  have  wealth  would  be 


SUBSTITUTES    FOR   MONEY.  345 

compelled  to  carry  on  all  the  business  of  the  world. 
Other  persons  can  often  use  wealth  in  business  to 
better  advantage  than  its  owner.  After  paying  him 
more  for  the  use  of  it  than  he  could  make  himself, 
they  can  still  make  a  profit. 

How  CREDIT  SAVES  THE  USE  OF  MONEY.  — . 
Credits  make  possible  a  great  extension  of  book  ac-. 
counts,  by  which  exchanges  take  place  without  the 
use  of  money.  A  credit  itself  saves  no  money,  since 
the  payment  is  only  deferred.  One  gets  the  goods 
without  the  immediate  use  of  money ;  but,  if  he  pays 
when  he  has  promised,  it  requires  just  as  much  money 
to  make  the  payment  as  if  it  had  been  made  in  the 
first  place.  But  the  credit  gives  tune  for  the  balanc- 
ing of  book  accounts  which  may  offset  one  account  by 
another, .  and  no  money  be  required.  The  world 
becomes  one  great  clearing-house.  Every  one  who 
comes  to  it  owes  other  people  and  others  owe  him. 
By  a  system  of  book-keeping,  debts  cancel  debts. 
What  one  gets  is  goods  for  goods.  The  things  he 
has  parted  with  pay  for  the  things  he  has  purchased. 
The  trade  is  complete.  It  is  made  without  money,  by 
the  use  of  accounts.  Settlement  of  accounts,  to  any- 
thing like  the  present  extent,  would  be  impossible  but 
for  the  time  element  in  credit.  The  goods  received 
in  payment  would  necessarily  be  delivered  the  same 
day.  Where  purchases  are  made  on  a  few  weeks' 
credit,  there  is  time  for  other  transactions  which  bal- 
ance the  first.  The  supposed  case  of  the  farmer  and 
the  general  store  is  possible  only  where  credit  is  given 
by  one  party  or  the  other.  They  are  supposed  to  have 


346  EXCHANGE. 

a  running  account  for  a  year,  and  during  the  year  the 
transactions  nearly  balance  each  other.  If  no  credit 
were  given,  the  farmer  must  take  goods  on  the  day  he 
sold  produce,  and  to  its  exact  value,  or  payment  must 
be  made  in  money.  What  is  true  of  the  farmer  and 
the  general  store  is  true  of  the  largest  business  trans- 
actions. Country  banks  keep  a  balance  in  a  bank  in 
the  metropolis,  thus  giving  them  credit,  in  order  that 
business  may  be  done  by  accounts,  and  not  by  cash. 
Only  through  credits  can  book  accounts  become  a  sub- 
stitute for  money  to  any  great  extent. 

BANK  CREDITS.  —  Credits  which  are  supposed  to 
have  the  most  influence  as  a  substitute  for  money  are 
bank  credits.  A  bank  lends  not  only  its  own  capital, 
but  its  deposits.  It  can  safely  lend  a  certain  portion 
of  its  deposits  on  short  time — sixty  or  ninety  days — 
since  they  will  not  all  be  called  for  at  once.  But  in 
granting  applications  for  loans,  account  is  taken, 
among  other  things,  of  the  amount  of  money  the  bor- 
rower usually  keeps  on  deposit  in  the  bank.  If  he 
gives  his  note  for  a  thousand  dollars,  that  sum  is  sim- 
ply passed  to  his  credit.  He  may  not  draw  it  out  on 
the  day  of  the  loan.  Part  of  it  may  remain  in  bank 
until  the  note  is  due.  Seldom  indeed  does  he  draw 
out  the  actual  money.  He  probably  pays  some  debt 
or  makes  some  purchase  with  a  check  on  the  bank. 
This  check  may  be  deposited  in  the  same  bank,  in 
which  case  no  money  is  required  ;  the  bank  has  in- 
creased both  its  deposits  and  its  loans.  Even  if  the 
check  is  deposited  in  some  other  bank,  it  increases  its 
deposits,  and  the  loans  of  one  bank  thus  appear  as  de- 


SUBSTITUTES    FOR   MONEY.  347 

posits  on  the  books  of  another.  The  granting  of 
loans  by  banks  has  been  compared  to  the  issue  of 
money.  It  has  been  said  that  the  currency  can  be  in- 
flated by  bank  loans  as  well  as  by  the  issue  of  paper 
money.  It  is  rather  a  substituting  of  book  accounts 
for  money.  So  long  as  actual  cash  is  not  drawn  from 
the  bank  by  depositors,  or  by  other  banks  in  settle- 
ment, the  loans  enable  depositors  to  do  business  by 
book  accounts.  To  a  certain  extent  all  banks  are  one. 
While  the  loans  of  one  bank  appear  as  deposits  in  an- 
other, the  loans  of  the  second  also  appear  as  deposits 
in  the  first,  balancing  one  another.  If  a  bank  is  in 
real  trouble,  other  banks  of  the  city  will  frequently 
come  to  its  aid.  A  large  part  of  the  business  of  every 
city  is  thus  transacted  without  real  money,  by  the  aid 
of  book  accounts,  as  previously  explained.  These 
book  accounts  would  be  impossible  but  for  the  system 
of  loans  granted  by  the  banks.  One  can  make  pay- 
ments by  checks  when  a  bank  has  guaranteed  his 
checks.  Where  a  large  circle  of  men  do  business  by 
checks,  they  offset  one  another — that  is,  the  exchanges 
of  goods  are  made  by  means  of  book  accounts,  kept 
by  the  bank,  made  possible  by  the  banks  granting 
credit  in  the  shape  of  loans. 

This  policy  is  sometimes  carried  beyond  the  danger 
line.  It  is  assumed  that  the  bank  has  some  capital, 
real  money  of  its  own,  in  the  beginning,  as  security. 
If  its  loans  are  made  with  caution,  they  will  even- 
tually pay  the  deposits ;  but  the  call  for  the  payment 
of  deposits  may  be  so  sudden  that  the  reserves  will  be 
exhausted  before  loans  become  due.  In  such  cases  it 


348  EXCHANGE. 

is  necessary  for  the  bank  to  cease  further  loans,  which 
disappoints  those  depending  on  them,  and  perhaps 
completes  a  financial  crash.  With  the  great  experi- 
ence gained  in  the  banking  business,  and  the  support 
banks  give  to  others  worthy  of  it,  the  system  is  com- 
paratively safe,  and  enables  book  accounts  to  be  sub- 
stituted for  money  to  an  extent  otherwise  impossible. 
The  one  thing  to  be  remembered  is  that  the  real 
substitute  for  money  is  neither  bank  checks  nor  credit 
in  any  form,  but  book  accounts.  They  are  made 
possible  by  credit,  and  checks  are  a  part  of  their  ma- 
chinery. 


BOOK  VI. 

THE  DISTRIBUTION  OF  PRODUCED 
WEALTH. 


BOOK  VT. 

DISTRIBUTION  OF  PEODUCED  WEALTH. 

INTRODUCTION. 

CHAPTER  I.  KENT  —  THE  SHARE  OP  THOSE  WHO 
HAVE  POSSESSION  OF  THE  RESOUR- 
CES OF  NATURE, 355 

CHAPTER       II.     INTEREST  —  THE    SHARE  OF  PRODUCED 

WEALTH, 363 

CHAPTER     III.     THE  SHARE  OF  GOOD  NAME,  ....       375 
CHAPTER     IV.     THE  SHARE  OF  MONOPOLY,      ....     382 

CHAPTER       V.     THE  SHARE  OF  THE  PRODUCER — PROFITS 

OF  PRODUCTION, 397 

CHAPTER     VI.     THE  SHARE  OF  THE  MERCHANT — PROFITS 

OF  EXCHANGE,    . 406 

CHAPTER   VII.     THE     SHARE    OF    THE    LABORER    WHO 

WORKS  FOR  HIMSELF, 411 

CHAPTER  VIII.     THE    SHARE    OF    THE    LABORER    WHO 

WORKS  FOR  WAGES, 420 

CHAPTER     IX.     THE  SHARE  OF  LABOR  WHICH  SATISFIES 

WANTS  DIRECTLY, 436 

CHAPTER       X.     THE  BOOTY  OF   THE  ROBBER,  AND  THE 

WINNINGS  OF  THE  GAMBLER,  ...     441 

CHAPTER     XI.     THE  SHARE  OF  THE  GOVERNMENT,    .     .     445 


BOOK  VI. 

THE  DISTRIBUTION  OF  PRODUCED 
WEALTH. 

The  ownership  and  control  of  the  means  of  satisfy- 
ing wants  was  treated  of  in  Book  III.,  but  the  Re- 
sources Produced  by  Human  Industry  require  further 
discussion,  because  so  many  persons  and  so  many  in- 
terests unite  in  their  production.  This  book  may  be 
regarded  as  a  continuation  of  Book  III.  When  five 
hundred  men  unite  in  the  production  of  shoes  in  a 
modern  factory,  the  distribution  of  the  proceeds  is  a 
complicated  affair.  Only  a  part  of  the  work  in  pro- 
ducing the  shoes  is  done  by  the  men  in  the  factory. 
The  farmer  who  raised  the  animals  from  which  the 
skins  were  taken,  and  the  tanner  who  converted  the 
skins  into  leather,  had  as  much  to  do  with  the  pro- 
duction of  the  shoes  as  the  workmen  in  the  factory. 
Neither  will  men  erect  buildings,  and  make  costly 
machinery,  without  expecting  something  for  their  use. 
How  shall  the  share  of  each  interest  be  determined? 
Even  if  the  shoes  were  divided  among  all  interested 
parties  in  just  proportion,  what  would  they  do  with 
them  ?  They  can  only  exchange  them  for  other  prod- 
ucts, and  their  final  reward  depends  as  much  on 
23  (  351  ) 


352  DISTRIBUTION    OF   PRODUCED    WEALTH. 

what  they  get  for  the  shoes  as  on  the  number  of  shoes 
they  make.  So  that  the  question  finally  resolves  it- 
self into  an  inquiry  as  to  what  share  of  the  nation's 
product  each  one  who  contributes  to  its  production 
should  receive. 

Practically,  we  know,  these  questions  are  settled  by 
Exchange.  The  farmer  sells  the  hide  or  skins,  and 
thus  transfers  to  the  purchaser  his  right  to  a  share  of 
the  finished  shoes.  The  tanner  sells  the  leather  to 
the  factory,  and  with  the  sale  transfers  his  right  to  a 
share  in  the  finished  product.  Usually  the  workmen 
sell  their  labor,  and  transfer  the  right  to  their  share 
to  the  employer,  in  return  for  wages.  The  fact  that 
one  owns  his  own  labor  implies  his  right  to  sell  it,  as 
well  as  to  use  it  in  production  on  his  own  account. 
The  manufacturer  sells  the  goods  to  the  wholesale 
dealer,  and  he  to  the  retailer,  and  he,  at  last,  to  the 
consumer.  Each  one  who  has  contributed  to  the  pro- 
duction of  the  goods  has  thus  sold  his  share  ;  and  the 
price  he  has  received  has  been  determined  by  Ex- 
change— by  the  supply  of  what  he  had  to  contribute, 
iand  the  demand  for  his  service,  and  for  the  finished 
goods.  Even  if  each  had  not  sold  out  his  share  as 
the  work  progressed,  it  would  have  been  determined 
by  the  laws  of  demand  and  supply  in  Exchange.  We 
see,  then,  the  need  of  understanding  the  laws  of  Ex- 
change before  proceeding  tq  distribution.  Distribu- 
tion depends  on  other  principles  as  well  as  those  of 
Exchange,  but  we  can  not  treat  of  the  former  without 
assuming  some  knowledge  of  the  latter. 

In  theory,  any  product  of  human  industry  should 
first  be  distributed  among  the  interests  which  have 


DISTRIBUTION   OF   PRODUCED   WEALTH.          353 

united  in  its  production ;  then  each  person  would  use 
his  share  as  he  saw  fit,  exchanging  it  for  such  things 
.as  he  most  desired,  or  for  the  services  of  others. 
There  would  then  arise  a  secondary  distribution,  by 
which  all  the  products  of  human  industry  would  be 
distributed  among  the  people  of  the  nation,  by  each 
exchanging  with  others.  In  practice,  we  know,  there 
is  no  distinction  between  the  primary  and  secondary 
distribution.  The  members  of  a  co-operative  shoe 
factory  would  not  divide  the  shoes  among  themselves ; 
but  the  factory  would  sell  them  for  cash,  and  each 
would  receive  his  agreed  proportion  of  the  money. 
With  the  money  he  must  buy  such  things  as  he  needs, 
and  the  quantity  he  can  buy  with  a  dollar  is  just  as 
important  as  the  number  of  dollars  he  receives.  It  is 
simpler,  therefore,  to  ask,  What  share  of  the  nation's 
products  will  each  receive  ? 

No  more  can  be  distributed  than  is  produced.  It  is 
true  that  methods  of  distribution  react  on  production. 
Under  suitable  encouragement  one  puts  forth  more 
effort ;  with  freedom  and  protection  to  property,  more 
is  produced  and  saved  than  under  slavery  and  inse- 
curity. So  far,  therefore,  as  methods  of  distribution 
react  on  production,  they  indirectly  increase  the  sum 
of  goods  to  be  distributed ;  but  in  no  case  can  more 
be  distributed  than  is  produced.  It  is  a  common 
though  unformulated  idea,  that  there  exists  somewhere 
a  store  of  goods  from  which  an  unlimited  quantity 
can  be  drawn.  No  such  store  exists.  There  are 
those  who  suppose  that  wages  might  be  almost  indefi- 
nitely increased,  and  everybody  be  better  off.  An 


354          DISTRIBUTION    OF   PRODUCED   WEALTH. 

increase  of  wages  must  diminish  the  share  of  some 
other  persons,  usually  of  other  laborers,  unless  produc- 
tion is  correspondingly  increased.  If  the  laborers  of 
a  country  are  all  employed  economically,  an  increase 
of  wages  does  not  mean  an  increase  of  production. 
The  product  to  be  distributed  is,  therefore,  limited. 
The  method  of  its  distribution,  and  the  share  of  each,, 
we  are  to  study  in  this  book. 

The  essential  agents  of  production  are  the  Re- 
sources of  Nature,  and  Labor ;  and  in  modern  produc- 
tion, Capital  almost  always  contributes  its  aid.  The 
older  Political  Economists,  therefore,  taught  that  all 
wealth  produced  was  distributed  into  three  shares — 
land,  capital  and  labor.  This  statement  is  correct  as 
far  as  it  goes  ;  but  the  great  share  of  Labor  is  subdi- 
vided into  many  minor  shares,  and  some  classes  of 
laborers  have  little  in  common.  Prof.  Francis  A. 
Walker  was  the  first  to  point  out  the  importance  of 
the  share  of  the  "  Undertaker "  of  the  business, 
which  he  distinguished  from  the  share  of  the  superin- 
tendent and  the  laborer.  Yet  this  share  of  the  un- 
dertaker of  the  business  is  really  a  part  of  the  great 
share  of  labor  in  the  economic  sense,  which  includes 
all  effort  of  human  beings  put  forth  for  the  purpose 
of  satisfying  the  world's  wants.  We  shall,  therefore, 
consider :  first,  Rent,  the  share  of  those  who  control 
the  Resources  of  Nature  ;  second,  the  share  of  Pro- 
duced Wealth ;  then  the  shares  of  other  interests 
which  are  to  receive  anything  from  a  nation's  annual 
product ;  and,  last,  the  shares  of  the  various  classes 
of  laborers,  which  combined  form  the  largest  share  of 
all. 


CHAPTER  I. 

HENT:-THE   SHAKE  OF   THOSE   WHO   HAVE  CON- 
TROL OF    THE  RESOURCES  OF    NATURE. 

The  word  Rent  as  used  by  Political  Economists  has 
a  narrower  meaning  than  in  popular  speech.  It  never 
means  the  sum  paid  for  the  use  of  a  building,  but 
•only  that  which  is  paid  for  the  use  of  the  ground  on 
which  the  building  stands — the  ground  rent,  as  it  is 
sometimes  called.  The  separation  of  the  rent  of  the 
ground  from  the  sum  paid  for  the  use  of  the  building 
is  easy,  and  is  common  in  practice.  In  some  cities 
mostly  buildings  are  erected  on  leased  land,  with  a  con- 
dition that  there  shall  be  a  revaluation  every  five 
years ;  and  the  rent  is  increased  or  diminished  as  the 
ground  is  found  more  or  less  valuable,  by  arbitrators 
or  the  courts.  Rent  has  to  do  only  with  the  Re- 
sources of  Nature,  and  is  the  share  of  the  product 
which  the  owner  receives  for  their  use.  The  econom- 
ic rent  of  a  city  lot  is  precisely  the  same,  whether  it 
serves  as  a  foundation  for  a  one-story  or  a  ten-story 
building.  The  economic  rent  of  a  farm  is  the  same 
whether  there  are  buildings  on  it  or  not.  We  must 
always  separate  the  land  from  the  "  improvements." 

The  Resources  of  Nature  are  absolutely  necessary 
to  production.  They  are  even  more  important  than 
labor,  for  land  uncultivated  will  bring  forth  a  limited 
amount  of  food  for  man,  and  wild  animals  and  fish 

(355) 


356  DISTRIBUTION    OF   PRODUCED    WEALTH. 

help  to  supply  the  wants  of  the  savage;  but  labor 
alone  is  helpless.  A  thousand  laborers  would  starve 
on  an  island  of  bare  rock.  Land  is  necessary  for 
standing-room  and  breathing-room,  and  as  a  site  for 
a  dwelling.  If  the  owner  of  an  island  011  which  a- 
thousand  people  were  shipwrecked  could  enforce  a  mo- 
nopoly of  the  Resources  of  Nature,  he  could  put  all 
the  people  at  work  and  obtain  any  share  of  the  prod- 
uct he  pleased.  All  that  would  be  necessary  would 
be  to  allow  the  people  enough  to  prevent  actual  star- 
vation. Such  an  island  owner  could  get  a  larger 
share  of  all  that  is  raised  on  the  Island  than  if  the 
people  were  his  slaves;  because  under  freedom  men 
will  put  forth  greater  exertions  than  under  the  fear  of 
the  lash,  and  the  island  owner  need  allow  no  more 
than  the  necessities  of  life  in  either  case.  This  state 
of  things  was  almost  realized  in  Ireland,  but  would  be 
impossible  where  land  is  plentier. 

On  the  other  hand,  on  our  fertile  Western  prairies, 
in  an  early  day,  land  was  worth  very  little.  It  was 
owned  by  the  government,  and  there  was  more  than 
the  people  could  use. 

We  can  not  say  that  any  particular  share  of  the 
product  is  due  to  land,  and  another  share  due  to  la- 
bor ;  in  one  sense  it  is  all  due  to  land,  and  in  another 
all  due  to  labor.  Both  are  essential  to  production  ; 
either  can  afford  to  give  the  other  nine-tenths  of  the 
product  rather  than  do  without  it.  It  is,  therefore,  a 
question  of  the  division  of  the  product :  and  the  share 
which  the  owners  of  the  land  receive  for  its  use  is- 
named  Rent.  Our  object  is  now  to  find  how  large 
this  share  will  be. 


KENT.  357 

Rent  is  entirely  independent  of  the  question  of  pri- 
vate or  public  ownership  of  land,  which  has  before 
been  considered.  There  would  be  rent,  just  the  same, 
if  all  the  land  were  owned  by  the  government ;  the 
only  difference  being  that  the  rent  would  be  paid  to 
the  government,  and  make  taxes  unnecessary.  The 
question  of  the  ownership  and  control  of  the  Re- 
sources of  Nature  has  nothing  to  do  with  economic 
rent,  which  is  the  share  that  the  one  in  control  of  the 
land  (  whoever  he  is  )  can  claim,  or  gain  by  its  use. 

Rent  is  the  advantage  which  the  owner  of  any 
particular  Resource  of  Nature  has  from  its  possession. 
The  older  Political  Economists  drew  their  illustrations 
mainly  from  agricultural  rent.  They  assumed  that 
there  was  some  land  which,  on  account  of  its  distance 
from  market,  poor  quality,  or  other  reason,  just  paid 
the  cost  of  cultivation,  so  that  the  owner  gained  noth- 
ing from  its  possession.  Indeed,  every  farm  might 
have  a  little  such  land.  All  that  the  best  land  pro- 
duces in  addition  to  the  cost  of  .cultivation  is  rent. 
All  grain  of  the  same  quality  sells  for  the  same  price 
in  the  same  market.  If  the  poorest  land  pays  for 
cultivation,  better  land  pays  something  more,  and  the 
difference  is  the  advantage  the  owner  has  from  its 
possession.  This  advantage  is  rent.  By  poor  land 
we  mean,  not  only  poor  in  quality,  but  in  respect  to 
markets,  roads,  or  anything  that  makes  it  less  desira- 
ble. One  man  hauls  his  wheat  twenty  miles  ;  another, 
one.  The  farm  near  market  has  an  advantage  over 
the  one  farther  out,  and  this  advantage  is  rent. 

Agricultural  rent  may  also  be  illustrated  from  di- 


358  DISTRIBUTION    OF   PRODUCED   WEALTH. 

minishing  returns,  though  the  thought  is  not  so  sim- 
ple. Let  us  suppose  that  a  farm  just  pays  when 
worked  to  the  point  of  diminishing  returns  to  the  la- 
bor bestowed  on  it.  With  the  increase  of  population, 
agricultural  produce  becomes  scarcer,  prices  rise  until 
it  pays  to  work  land  beyond,  diminishing  returns. 
The  additional  product  is  raised  at  a  greater  cost  of 
labor,  and  the  price  for  which  it  is  sold  pays  this  cost. 
The  other  portion  of  the  product  is,  therefore,  raised 
at  a  profit,  and  this  profit  is  rent.  Suppose  that  ten 
days'  labor  on  an  acre  of  land  produces  twenty  bushels 
of  wheat,  and  that  thirty  bushels  can  be  produced 
with  twenty  days'  labor.  Now,  unless  ten  bushels  of 
wheat  will  pay  for  ten  days'  labor,  this  additional  la- 
bor will  not  be  bestowed.  But,  then,  the  first  ten 
days'  labor  would  also  be  paid  for  by  the  ten  bushels 
of  wheat,  leaving  ten  bushels  as  rent  for  the  land. 
Every  farmer  knows  that  production  can  not  be  calcu- 
lated thus  accurately.  Much  depends  on  the  seasons, 
and  habit.  Still,  on  an  average,  the  tendency  among 
intelligent  farmers  is  to  work  land  about  as  well  as  it 
will  pay  to  work  it.  When  it  becomes  more  valuable, 
crops  requiring  more  labor  are  raised;  until,  near  a 
city,  the  land  is  used  as  a  garden  and  is  worth  a  hun- 
dred dollars  a  year  rent.  One  can  as  well  afford  to 
pay  that  as  to  take  land  farther  out  for  three  dollars. 
Rent  is  the  advantage  derived  from  the  possession  of 
a  particular  piece  of  land ;  what  a  man  competent  to 
use  it  can  afford  to  pay  for  its  use. 

Even    agricultural    rent  depends  more  on  location 
than  on  the  fertility  of  the  soil;    and  for  purposes 


BENT.  359 

•other  than  agriculture,  rent  depends  almost  entirely 
on  location.  Why  do  merchants  go  to  a  city  ?  Be- 
cause they  can  sell  more  goods.  The  advantages  o£ 
location  may  be  so  great  that  one  will  pay  a  thousand 
dollars  a  year  for  the  use  of  each  front  foot  of  land 
to  build  upon.  For  the  use  of  an  acre  of  such  land 
one  could  obtain  $300,000  a  year.  This  is  the  ad- 
vantage that  its  possession  would  give  to  the  owner. 
This  is  rent. 

For  residence  purposes  rent  also  depends  mainly  on 
location.  For  various  reasons — nearness  to  business, 
good  neighborhood,  fashion,  sanitary  surroundings,  or 
all  combined — one  building-lot  is  far  more  desirable 
than  another.  In  what  we  may  call  the  second-class 
cities  of  the  United  States  there  is  a  great  deal  of 
residence  land,  the  annual  rent  of  which  exceeds  a 
thousand  dollars  an  acre.  This  is  what  some  persons 
are  willing  to  pay  rather  than  live  in  less  desirable 
locations. 

Economic  rent  is  the  same  whether  the  owner  uses 
the  land  himself  or  leases  it  to  others.  The  owner  of 
a  residence  lot  has  the  use  of  it ;  the  merchant  who 
owns  his  own  store  has  all  the  advantage  of  location 
in  his  business ;  the  farmer  gets  the  advantage  of  good 
land  or  land  near  market,  as  compared  with  farms 
which  are  just  worth  working.  This  advantage  is 
estimated  in  what  such  land  could  be  leased  for. 

Kent  is  a  very  large  share  of  the  annual  product  of 
a  nation,  and  increases  with  the  increase  of  population 
and  wealth.  Rent  is  not  only  a  large  gross  sum,  but 
in  densely  populated  countries  it  is  a  very  much  larger 


360  DISTRIBUTION    OF   PRODUCED   WEALTH. 

share  of  all  that  is  produced  than  it  is  in  new  coun- 
tries. Labor  must  therefore  have  a  smaller  share  of 
the  annual  production  of  any  country,  as  population 
increases,  even  if  it  receives  absolutely  more.  Why 
is  the  land  of  New  York  City  in  such  demand  ?  Be- 
cause of  the  great  population  and  wealth  west  of  it. 
Remove  this  population,  and  rents  would  be  what  they 
were  in  an  early  day.  The  immense  population  and 
wealth  of  the  United  States  makes  necessary  such  a 
city  as  New  York,  somewhere  on  the  Atlantic  coast ; 
and  the  coast  line  and  harbors  and  latitude  make  the 
present  location  the  best  place  for  it.  A  site  for  busi- 
ness here  gives  one  a  great  advantage,  and  that  ad- 
vantage is  economic  rent ;  so  that  the  owners  of  the 
land  on  which  the  city  stands  are  now  able  to  take 
immense  sums  from  the  total  product  of  the  country 
for  the  annual  use  of  these  few  square  miles  of  land. 
If  they  do  business  here  themselves,  they  make  these 
profits  by  reason  of  their  location  ;  if  they  lease  to 
others,  they  obtain  rent  from  them.  Either  way,  a 
large  share  of  the  immense  business  that  passes 
through  New  York  must  be  given  to  the  men  who 
own  the  land  on  which  the  city  stands ;  and  this  share 
must  continue  to  grow  larger  as  the  population  of  the 
country  increases.  What  is  true  of  New  York  is  true 
of  Chicago  and  other  great  cities.  The  owners  of  the 
land  on  which  any  city  stands  receive  a  large  share 
of  the  product  of  the  country  tributary  to  it,  as  rent. 
It  is  readily  seen  that  there  can  be  no  escape  from 
rent ;  and  that  in  an  old  and  wealthy  country,  with  a 
dense  population,  rent  must  absorb  a  large  share  o£ 


RENT.  361 

the  annual  product,  simply  because  a  part  of  the  land 
is  much  more  desirable  than  other  parts.  Prices  of 
goods  must  be  high  enough  to  pay  for  using  the  less 
desirable  land,  and  the  more  desirable  gains  the  ad- 
vantage. 

Is  there  any  way  by  which  the  total  share  of  rent 
can  be  reduced  ?  Evidently  by  a  more  even  distribu- 
tion of  population.  If  all  the  people  flock  to  a  few  of 
the  largest  cities,  the  demand  for  residence  land  must 
be  so  great  as  to  give  the  owner  larger  and  larger  rents. 
The  land  near  the  city  will  also  be  more  desirable. 
The  greater  portion  of  the  land  of  the  country  has 
really  been  placed  farther  from  the  people,  by  reason 
of  the  people  moving  away  from  it.  The  cause  of 
rent  is  the  unequal  desirability  of  different  pieces  of 
land.  If,  now,  there  were  more  small  cities  and  fewer 
large  ones,  so  that  the  people  were  distributed  more 
uniformly  over  the  country,  there  would  be  no  such 
demand  for  a  little  land  near  the  center  of  one  great 
city,  and  for  residence  land  about  it.  The  demand 
would  be  for  land  in  smaller  cities  ;  and  there  being 
so  much  more  of  it,  rents  must  be  comparatively  low. 
It  is  not  necessary  here  to  discuss  the  reason  for  the 
drift  of  population  to  the  large  cities ;  but  it  evidently 
means  that  the  people  must  pay  a  very  much  larger 
share  of  the  annual  production  of  the  nation  to  the 
owners  of  city  land.  What  is  paid  to  land  can  not  go 
to  labor. 

Where  there  is  no  rent,  the  entire  product  belongs 
to  the  laborers  (in  the  economic  sense  of  the  word) 
who  unite  in  its  production,  unless  they  choose  to  give 


362          DISTRIBUTION    OF    PRODUCED   WEALTH. 

a  portion  to  the  owner  of  Capital  for  its  use.  If  an 
Indian  cuts  down  a  tree  and  hollows  it  into  a  canoe, 
the  Resources  of  Nature  are  yet  so  plenty  that  there  is 
no  rent,  and  the  entire  canoe  belongs  to  him.  Later, 
if  he  attempts  to  fell  a  pine  tree,  he  will  find  a  man 
with  a  legal  title  demanding  a  share  of  the  lumber  for 
the  removal  of  the  tree.  That  is  rent.  That  is  the. 
advantage  one  has  in  the  possession  of  the  ground  the 
tree  stands  on.  In  a  new  country,  with  few  people, 
there  is  little  rent  to  pay ;  and  the  laborer  gets  the  en- 
tire result  of  his  labor.  He  takes  timber  when  he 
wants  it.  He  pastures  his  cattle  in  the  highway,  or 
on  the  commons ;  or  the  use  of  the  ground  he  fences 
in  costs  him  but  a  trifle. 

It  does  not  follow  that  people  were  better  off. 
There  is  advantage  in  a  population  of  a  certain 
density — dense,  but  not  too  dense.  Where  population 
is  not  too  large,  the  laborer  may  find  the  net  return 
for  his  labor  greater,  after  paying  rent,  than  it  was  in 
an  earlier  day  when  he  paid  none.  The  dense  popula- 
tion, however,  introduces  a  class  of  rent  receivers  who 
can  live  without  work,  or  if  they  labor,  as  is  more 
likely,  they  will  have  a  much  larger  income.  Distinc- 
tions are  thus  introduced  into  Society,  and  the  laborer 
seems  to  have  less  because  the  others  have  more.  The 
satisfaction  of  our  wants  depends,  to  a  considerable  ex- 
tent, on  what  we  have  as  compared  with  others ;  and  it 
is  undoubtedly  true  that  one's  satisfactions  in  life  are 
actually  diminished  by  an  increase  in  the  income  of 
those  about  him. 


CHAPTER  II. 

INTEREST— THE  SHARE  OF  PRODUCED  WEALTH. 

Labor  and  Natural  Wealth  are  the  only  Resources 
absolutely  necessary  to  production.  In  the  beginning- 
there  were  no  other.  Hence,  Labor  will  receive  all 
that  is  left  after  paying  rent,  provided  it  asks  no  as- 
sistance. The  product  may,  however,  be  increased, 
sometimes  a  thousand-fold,  by  the  aid  of  capital ;  and 
the  producer  may  find  it  profitable  to  give  even  a, 
large  share  to  capital,  and  have  more  left  for  himself. 
He  seldom  pays  the  owner  of  capital  as  much  as  its 
use  aids  him  in  production. 

Capital  is  that  part  of  Produced  Wealth  which  is 
employed  in  production ;  but  all  Produced  Wealth — 
that  which  satisfies  wants  directly  as  well  as  indirectly 
— can  obtain  a  share  in  the  world's  product  in  return 
for  its  use,  and  for  the  aid  it  renders  in  the  satisfac- 
tion of  wants. 

1.  PERMANENT  PRODUCED  WEALTH. — Notice,  firstr 
that  which  satisfies  wants  directly r,  such  as  dwellings. 
The  dwelling  continually  furnishes  shelter  day  by 
day,  and  this  is  almost  as  desirable  as  food.  The 
owner  has  this  advantage  over  those  who  have  no- 
dwellings.  He  would  not  allow  another  person  to  use 
his  house  without  something  in  return ;  and  one  who 
is  engaged  in  production  can  well  afford  to  give  part 
of  the  product  for  the  use  of  such  a  dwelling,  rather 

(363) 


364          DISTRIBUTION    OF   PRODUCED   WEALTH. 

than  do  without  it.  On  the  other  hand,  while  one 
will  erect  a  dwelling  for  his  own  family,  he  will  not 
build  one  for  others  unless  he  expects  to  obtain  some- 
thing for  its  use. 

Permanent  Produced  Wealth  which  satisfies  wants 
indirectly,  of  which  machinery  is  the  type,  vastly  in- 
creases the  product  of  labor.  One  man  with  a  ma- 
chine will  frequently  produce  as  much  as  a  hundred 
by  hand.  Ninety-nine  per  cent,  of  the  product  is 
therefore  due  to  the  machine,  and  only  one  per  cent, 
to  labor.  If  the  laborer  owns  the  machine,  he  is  a 
hundred  times  better  off  ;  if  he  does  not  own  it,  he 
can  afford  to  give  almost  any  share  for  its  use. 

2.  CONSUMABLE  PRODUCED  WEALTH. — The  share 
which  the  owner  of  this  obtains  for  its  use  is  no  less 
just,  but  the  reasons  for  awarding  it  are  not  so  appar- 
ent. The  reason  for  interest  is  here  the  time  element 
in  production.  A  savage  is  obliged  to  supply  his 
wants  "  from  hand  to  mouth."  He  catches  fish  and 
kills  game  for  the  day  or  week,  and  the  accumulated 
stores  of  food  are  small.  Civilized  production  re- 
quires at  least  a  year,  and  what  is  the  producer  to  live 
on  in  the  meantime?  The  crops  are  dependent  on 
the  seasons.  One  crop  a  year  is  ordinarily  the  rule. 
Although  a  suit  of  clothing  may  be  made  up  in  a 
week,  this  is  only  the  last  stage  of  the  production. 
The  cloth  must  be  manufactured  from  wool  or  cot- 
ton which  required  a  year  for  its  growth.  If  the 
farmer  or  laborer  has  a  year's  supply  on  hand,  he  may 
depend  on  the  sale  of  the  product  at  the  end  of  the 
year  for  another  year's  living.  But  suppose  he  has 


INTEREST.  365 

nothing.  If  he  gets  food  and  the  necessities  of  life 
for  his  family  as  does  the  Indian,  he  will  have  but  a 
miserable  living.  If  he  is  free  to  fit  the  ground  and 
sow  a  crop,  he  will  get  ten  times  as  much  at  the  end 
of  the  year.  If  some  one  has  a  supply  and  will  let  him 
consume  it,  he  can  afford  to  return  as  much  at  the 
end  of  the  year,  and  something  besides,  perhaps  twice 
as  much.  The  farmer  in  this  condition  usually  gets 
his  supplies  of  the  country  merchant,  for  which  he 
pays  "  after  harvest  "  ;  and  the  merchant  must  have 
a  higher  price  for  the  goods  than  if  he  were  paid 
cash.  Even  if  he  sells  for  cash,  the  merchant  must 
carry  a  stock  of  goods  for  some  time  in  order  to  have 
what  the  people  happen  to  want. 

The  present  wonderful  methods  of  production  would 
be  impossible  except  that  somebody  carried  a  year's 
supply  of  consumable  wealth.  It  is  said  that  produc- 
tion is  going  on  all  the  tune  ;  so  wheat  is  growing  all 
the  time,  yet  it  is  a  year  from  one  harvest  until  an- 
other. While  manufacturing  is  a  continual  process, 
there  are  vast  quantities  of  materials  and  unfinished 
goods  in  process  of  production.  This  reserve  stock 
enables  laborers  to  be  employed  to  the  best  advantage. 
Without  it,  the  United  States  could  not  support  a 
million  people.  We  must,  then,  have  this  stock  of 
consumable  goods,  and  we  must  allow  the  owners  in- 
terest enough  to  induce  them  to  accumulate  it.  It 
would  be  better  if  each  man  had  enough  for  himself 
and  family  to  live  on  for  one  year.  He  could  then 
engage  in  production  on  his  own  account  if  he  thought 
it  more  profitable  than  working  for  wages. 


366  DISTRIBUTION    OF   PRODUCED    WEALTH. 

It  is  worth  while  here  to  notice  a  mistake  of  Henry- 
George,  who  assumes  that  wages  are  paid  out  of  the 
product,  and  not  out  of  previous  accumulations.  The 
illustrations  he  uses  are  such  as,  a  man  going  with  an 
employer  on  a  fishing  cruise,  his  wages  being  paid  out- 
of  the  catch  when  they  return.  But  how  do  the 
fishermen  live  in  the  meantime  ?  Why,  they  take 
provisions  along,  and  they  have  clothing  enough  to 
last  until  they  return.  If  the  employe  leaves  a 
family,  its  members  must  live  during  his  absence  out 
of  the  stock  of  goods  already  accumulated.  Thejr 
may  get  goods  on  trust  at  the  store.  The  fisherman 
may  own  a  house.  But  it  is  plain  that  both  the  work- 
man and  his  family  must  live  on  goods  already  pro- 
duced until  more  are  produced.  George,  like  many 
more  careful  writers,  fails  to  distinguish  between  one's- 
living  and  his  wages.  If  a  workman's  wages  are 
more  than  he  consumes,  he  may  receive  his  living  out 
of  the  stock  of  goods  already  accumulated,  and  wait 
for  the  remainder  until  the  production  is  completed. 
This  is  sometimes  the  case  with  the  farmer's  "  hired 
man."  The  farmer  furnishes  his  living  as  he  goes 
along,  and  lets  him  have  what  money  he  needs  to  use 
during  the  process  of  production.  At  the  end  of  the 
year,  when  production  is  complete,  he  pays  him  the 
remainder  of  his  wages. 

WHAT  FIXES  THE  SHARE  OF  PRODUCED  WEALTH? 
— We  are  now  ready  to  ask  how  much  the  owner  of 
Produced  Wealth  will  receive  for  its  use.  This  sum 
is  called  interest. 

First.     The    interest    on    all    forms    of    Produced 


INTEREST.  367 

I 

Wealth  tends  to  the  same  percentage.  Something 
is  usually  added  for  risk,  which  may  be  great  in  one 
place  and  almost  nothing  in  another.  Ignorance  of 
the  conditions,  and  friction,  as  well  as  personal  likes 
and  dislikes,  have  some  effect,  but  in  the  same  locality 
interest  on  all  forms  of  Produced  Wealth  tends  to  the 
same  point. 

Let  us  suppose  one  to  have  a  sum  of  money,  with 
which  he  can  buy  anything,  sufficient  for  the  support 
of  a  number  of  laborers  for  a  year.  He  controls  the 
direction  of  production.  He  can  build  houses,  a  busi- 
ness block,  a  factory  ;  or  set  men  to  producing  ma- 
chinery, or  any  other  form  of  Permanent  Wealth. 
Which  will  be  produce  ?  Why,  that  for  which  he  can 
get  the  largest  annual  return,  and  competition  thus 
tends  to  make  the  interest  on  all  of  the  investments 
equal. 

But  suppose  producers  of  consumable  goods  want, 
this  money  to  support  their  workmen  ?  If  they  offer 
him  a  higher  rate  of  interest  for  it  than  he  can  hope  to 
receive  from  a  permanent  investment,  he  will  naturally 
let  them  have  it.  Free  capital  is  said  to  flow  where 
it  receives  the  highest  interest,  reducing  the  rate  in 
one  line  of  production  and  increasing  it  in  another. 
What  really  flows  is  labor.  The  men  who  have  the 
means — the  stocks  of  food  and  goods — on  which  the 
laborer  must  live,  are  able  to  direct  that  labor  where 
it  will  pay  best— ^-now  to  the  production  of  build- 
ings, now  to  machinery  or  railroads,  now  to  the  ac- 
cumulation of  a  larger  stock  of  consumable  goods. 
The  great  lines  of  production  go  on  the  same  from 
24 


368  DISTRIBUTION    OF    PRODUCED    WEALTH. 

year  to  year.  The  diverting  of  a  little  labor  from  one 
purpose  to  another  which  promises  better  returns  suf- 
fices to  even  up  the  rate  of  interest  in  all. 

If  there  is  an  excess  of  any  form  of  Permanent 
Produced  Wealth,  interest  on  it  may  be  very  low,  and 
may  fall  to  nothing,  until  the  increase  of  population 
makes  more  demand  for  it,  or  a  portion  is  slowly  worn 
out  or  destroyed  by  time. 

The  interest  on  both  classes  of  capital  and  on  all 
forms  of  Produced  Wealth  really  tends  to  the  same 
point,  for  the  reason  that  so  large  a  part  of  all  the 
Produced  Wealth  in  a  country  is  consumable — certain 
to  be  used  up  in  the  support  of  the  people  in  a  year 
or  so,  and  much  of  it  perishable  if  not  so  used.  In 
the  last  analysis  the  greater  part  of  this  Consumable 
Wealth  is  paid  out  for  wages,  or  used  for  living  ex- 
penses of  farmers  and  other  producers.  Now,  the 
enormous  labor  power  of  the  country  can  be  turned  by 
wages  in  any  direction,  either  to  the  replacement  of 
the  wealth  consumed,  or  to  the  production  of  any  other 
form  of  wealth  which  will  pay  the  largest  interest. 
Competition  will  tend  to  direct  production  to  that 
form  of  wealth  which  will  pay  the  largest  interest,  and 
hence  to  bring  the  interest  on  all  the  various  kinds  of 
Produced  Wealth  to  the  same  rate. 

The  reader  will  notice  that  the  word  "  tends  "  has 
often  been  used  in  these  chapters.  The  actual  result 
in  society  is  almost  always  brought  about  by  a  com- 
bination of  forces,  all  of  which  act  with  more  or  less 
friction,  and  some  of  which  neutralize  others.  The 
simplest  way  is  to  consider  one  force  at  a  time.  We 


INTEREST.  369 

may  be  able  to  predict  what  will  be  its  effect  when 
acting  alone  and  without  friction  ;  but  there  may  be 
other  forces  which  modify  the  result  very  materially. 
The  friction  is  also  greater  in  some  instances  than  in 
others.  There  is  no  surer  mark  of  an  illogical  mind 
than  the  supposition  that  some  seeming  exception 
overthrows  a  principle  which  we  have  found  to  be 
true  by  careful  investigation.  Interest  on  various 
forms  of  Produced  Wealth,  as  a  matter  of  fact,  varies 
considerably.  Nevertheless,  it  tends  toward  the  same 
point.  By  errors  of  judgment,  too  much  of  one  thing 
is  produced.  If  it  be  Permanent  Wealth,  it  may  be 
a  long  time  before  the  population  grows  up  to  it,  or  it 
ivears  out.  Returns  are  often  higher  to  one  kind  of 
Produced  Wealth  because  others  do  not  know  how 
Iiigh  they  are,  or  fear  the  risk  of  the  investment, 
when  the  owner  alone  knows  it  to  be  safe.  These, 
and  many  other  influences,  cause  considerable  ap- 
parent variation  in  the  rate  of  interest.  Neverthe- 
less, when  taxes,  compensations  for  risk,  and  the  share 
of  profit,  are  deducted,  we  shall  find  that  the  rate  of 
interest  in  the  same  locality  varies  much  less  on  the 
various  forms  of  Produced  Wealth  than  we  might 
suppose. 

Second.  Not  only  does  competition  tend  to  reduce 
the  rate  of  interest  on  all  forms  of  Produced  Wealth 
to  the  same  rate,  but  it  also  determines  the  average 
rate  of  interest,  as  considered  apart  from  the  risk  in- 
volved in  lending.  The  rate  of  interest  must  be  high 
enough  to  induce  somebody  to  save  a  year's  supply 
for  the  people,  and  to  accumulate  machinery,  and 


370          DISTRIBUTION    OF    PRODUCED    WEALTH. 

other  Permanent  Wealth,  or  wants  can  not  be  satis- 
fied in  the  present  economical  way.  If  interest  rules 
too  low,  the  reserve  supply  for  the  world's  support 
will  be  endangered ;  if  too  high,  competition  will 
bring  it  down. 

A  high  rate  of  interest  is  a  great  inducement  to- 
saving.  A  farmer  knows  {hat  a  ditch  would  increase 
the  product  of  a  field  fifty  per  cent.  He  has  not  the 
time  to  dig  it,  but  the  inducement  to  work  more 
hours,  or  to  save  money  to  hire  it  dug,  is  strong.  A 
workman  is  paying  $200  a  year  for  a  little  house 
which  he  could  build  for  $500,  and  he  is  likely  to 
deny  himself,  and  save  money  to  get  a  home  of  hi& 
own.  A  manufacturer  sees  that  a  new  machine  would 
increase  his  profits  fifty  per  cent,  of  its  cost.  The 
machine  would  pay  for  itself  in  two  years.  If  he 
can  not  borrow  the  money,  he  will  make  every  effort 
to  save  it.  If  one  can  rent  a  house  for  four  per  cent, 
of  its  cost,  there  is  less  inducement  to  build  one ;  and 
if  a  manufacturer  can  borrow  money  at  four  per  cent., 
he  will  not  make  the  effort  to  save  that  he  made  when 
he  was  paying  fifty.  So,  if  one  can  lend  money  at 
three  per  cent,  a  month,  he  will  deny  himself,  and 
save  to  lend,  since  a  very  moderate  fortune  will  give 
him  an  income  on  which  he  can  live.  When  he  can 
get  only  four  per  cent,  a  year,  the  inducement  to  save 
is  less  strong.  More  people  are,  therefore,  saving 
where  interest  is  high,  and  numerous  small  fortunes 
are  accumulated.  If  interest  were  fifty  per  cent.,  it 
is  probable  that  a  very  large  part  of  the  people  would 
scrimp  themselves  in  living,  in  order  to  save  a  year's- 


INTEREST.  371 

supply  of  the  necessities  of  life,  and  avoid  the  pay- 
ment of  interest  to  others.  As  interest  becomes 
lower,  few  people  are  willing  to  save,  and  the  ma- 
jority will  consume  all  they  receive.  Yet  experience 
has  shown  that  a  few  will  continue  to  save  all  of  this 
sort  of  wealth  which  the  world  needs,  if  they  can 
gain  even  five  or  six  per  cent,  for  its  use — an  in- 
significant sum  compared  with  the  advantage  which 
the  world  gains.  It  is  because  interest  is  so  low  that 
laborers  do  not  save  more. 

It  is  undoubtedly  true  that  there  would  be  a  certain 
amount  of  saving  even  if  there  were  no  interest. 
Men  wish  to  lay  by  for  a  rainy  day.  But  it  would  be 
^ery  little.  Interest,  in  the  economic  sense,  is  not 
merely  the  sum  paid  for  the  use  of  money,  but  the  re- 
turn to  the  owner  from  any  form  of  Produced 
Wealth.  This  would  mean  that  when  one  built  a 
house  he  could  get  for  its  use  only  what  the  annual 
repairs  cost,  and  a  sum  which  would  replace  the  build- 
ing when  it  is  destroyed  by  time.  It  would  be  safer 
to  bury  his  gold  in  the  earth.  What  would  be  the  in- 
ducement to  make  machinery  if  one  hoped  to  get  back 
only  the  cost  of  the  machine  when  it  is  worn  out?  It 
is  true  that  the  desire  to  accumulate  a  hoard  of 
wealth  for  future  needs,  or  for  posterity,  would  lead  to 
considerable  saving,  especially  by  the  wealthy,  and  the 
saving  might  take  the  form  of  machinery  and  build- 
ings ;  but  we  can  hardly  imagine  that  such  saving 
would  be  sufficient  to  keep  the  world  going.  The 
stock  of  Produced  Wealth  would  diminish,  and  wants 
would  be  satisfied  at  far  greater  cost  of  labor. 


372  DISTRIBUTION    OF   PRODUCED    WEALTH. 

How  high  a  rate  of  interest  is  necessary  to  maintain 
the  existing  stock  of  wealth,  depends  on  the  character 
of  the  people,  their  progress  in  civilization,  and  the 
relative  amount  of  wealth  in  the  country.  The  ac- 
cumulation of  a  great  reserve  requires  time,  and  is  in 
the  beginning  a  slow  process.  Because  interest  rules,, 
for  a  few  years  in  a  new  country,  at  twenty  per  cent.,, 
it  does  not  follow  that  this  rate  is  necessary  to  induce 
people  to  save  ;  but  they  have  not  had  time  to  save 
the  capital  needed.  Produced  Wealth  is  worth  this 
high  interest  to  use,  and  there  is  so  little  to  lend  that 
there  is  no  competition  among  the  lenders.  Wait  un- 
til time  has  been  given  for  accumulation.  In  Eng- 
land, Holland,  and  the  United  States,  interest,  exclu- 
sive of  taxes  and  risk,  has  fallen  as  low  as  two  per 
cent. 

The  annual  share  of  Produced  Wealth  is  compara- 
tively a  small  one,  and  the  share  of  that  portion  which 
is  used  in  production,  called  capital,  is  smaller  still. 
If  we  roughly  assume  that  the  manufactured  products 
each  year  equal  in  value  the  capital  invested,  the  pro- 
ducers will  pay  to  capital  interest  on  the  investment, 
say  six  per  cent. ;  which  would  be  six  per  cent  of  the 
product,  since  we  assume  the  product  equals  the  capi- 
tal employed.  Certainly  laborers  have  no  reason  to 
complain  if  capital  receives  six  or  ten  cents  out  of 
every  dollar's  worth  of  goods  produced  in  mills  where 
one  man  turns  out  a  hundred  times  as  much  as  he 
could  by  hand.  It  is  not  expected  that  capital  will 
receive  anything  like  what  it  contributes  to  produc- 
tion. 


INTEREST.  373 

In  concluding  this  chapter  it  must  not  be  forgotten 
that  the  sum  paid  for  the  use  of  a  building  includes 
both  rent  for  the  ground,  and  interest  on  the  value  o£ 
the  improvements  ;  also  that  a  large  portion  of  Per- 
manent Produced  Wealth  is  used  by  the  owners,  who 
do  not  pay  interest  to  others.  Its  possession  contrib- 
utes to  production  or  to  the  satisfaction  of  their 
wants  directly,  and  this  benefit  is  a  part  of  the  share 
of  Produced  Wealth. 

The  share  of  Produced  Wealth  is  called  interest, 
and  the  rate  of  interest  is  determined  by  competition. 
It  tends  to  that  point  which  will  induce  people  to  ac- 
cumulate enough  Produced  Wealth  to  enable  the 
world's  production  to  be  carried  on  with  the  greatest 
economy.  If  interest  is  too  high,  it  is  a  spur  to  ac- 
cumulation. If  it  is  too  low,  the  increase  of  Pro- 
duced Wealth  goes  forward  less  rapidly  than  it  would 
otherwise. 

Put  in  another  way,  the  average  rate  of  interest  is 
determined  by  what  additional  Produced  Wealth  is 
worth  to  use.  When  it  is  relatively  abundant,  addi- 
tional wealth  is  of  little  value.  If  we  have  all  the 
cotton  factories  needed  to  supply  the  wants  of  the 
people,  an  additional  factory  would  have  no  value  in. 
use,  and  would  pay  a  very  low  rate  of  interest  on 
the  investment.  As  new  machines  are  invented,  or  as. 
we  discover  new  methods  in  which  Produced  Wealth 
can  be  made  to  yield  a  return,  interest  tends  to  rise. 
The  combined  result  of  all  tendencies,  to-day,  is 
toward  the  lowering  of  the  rate  of  interest.  The 
average  rate  may  yet  sink  to  two  per  cent. 


374          DISTRIBUTION    OF    PRODUCED    WEALTH. 

Interest  is  usually  reckoned  as  though  it  were  011 
money.  But  the  real  things  that  the  manufacturer 
wants  are  not  money,  but  labor,  machinery,  etc. 
What  the  laborers  want  is  food,  clothing  and  other 
comforts  and  luxuries  of  life.  Money  is  only  a  con- 
venient way  of  estimating  the  relative  value  of  all 
these  things  and  keeping  the  accounts.  In  the  last 
analysis  it  is  goods,  dwellings — real  things.  We 
have,  therefore,  considered  the  substance  and  not  the 
shadow.  We  are  much  more  likely  to  get  at  the  truth 
by  dealing  with  real  things,  the  things  that  satisfy 
wants,  than  by  suffering  ourselves  to  be  confused  by 
the  idea  that  it  is  money  we  are  seeking  for.  The 
return  from  all  forms  of  Produced  Wealth  is  interest. 
Even  the  satisfaction  the  owner  gets  from  a  costly 
painting  is  supposed  to  equal  the  average  rate  of  in- 
terest on  its  value ;  else  he  would  sell  it,  and  invest 
money  in  something  else. 


CHAPTER  III. 

THE  SHAKE  OF  GOOD  NAME  AND  ESTABLISHED 
BUSINESS. 

A  " good  name"  and  an  established  business  are 
usually  classed  with  capital,  but  they  are  not  Pro- 
duced Wealth,  because  all  wealth  is  material.  Here 
we  see  the  advantage  of  looking  at  things  as  they 
are.  When  we  talk  of  Produced  Wealth  there  is  no 
danger  of  failing  to  understand  precisely  what  the 
term  covers,  and  the  division  is  a  natural  one. 

A  "  good  name "  and  established  business  are  fre- 
quently the  result  of  great  labor,  and  are  often  of 
great  advantage  to  the  world  as  well  as  to  the  owner. 
In  any  case  the  owner  is  entitled  to  the  benefit  they 
confer  upon  him.  One's  name  is  a  part  of  himself, 
and  the  good  name  of  a  business  is  a  guarantee  of  its 
character  which  saves  others  trouble  of  investigation 
and  risk  of  loss. 

Suppose  one  is  engaged  in  the  production  of  shoes. 
He  can  wear  very  few  of  them.  The  rest  are  worth 
only  what  he  can  get  for  them.  The  satisfaction  of 
his  wants  will  depend  on  Exchange,  on  how  much 
money  he  can  get  for  the  shoes,  and  how  much  he  can 
buy  with  the  money.  Now,  when  two  factories  make 
shoes  equally  good,  why  is  it  that  one  will  receive  a 
higher  price  for  his  goods  than  another?  Leaving 
out  differences  in  the  ability  of  the  salesmen,  the 

(375) 


376  DISTRIBUTION    OF    PRODUCED    WEALTH. 

higher  price  comes  from  the  reputation,  or  the  good 
name  of  the  shoes.  There  are  two  brands  of  soap  on 
the  market  which  have  for  years  enjoyed  a  large  sale. 
It  is  said  that  soap  equal  in  every  respect  to  either  can 
easily  be  made.  But  can  it  be  sold?  Not  at  the 
same  price  except  by  increased  cost  of  selling.  These 
soaps  are  known.  They  have  a  good  name.  A  great- 
many  people  have  used  them,  and  know  them  to  pos- 
sess certain  qualities,  and  have  been  led  to  believe 
they  possess  other  qualities  which  can  not  be  so- 
readily  ascertained. 

No  one  not  an  expert  is  a  judge  of  all  goods  from 
their  appearance.  He  must  buy  largely  on  the  repu- 
tation of  the  maker  or  the  seller.  If  he  has  bought 
something  of  a  certain  brand  and  found  it  to  be  good, 
he  feels  safe  in  buying  another  article  of  the  same 
make.  Another  manufacturer  may  make  precisely 
the  same  goods,  or  those  equal  to  them,  yet  the  pur- 
chaser does  not  know  that  they  are  as  good ;  and  can 
tell  only  by  purchasing  and  using.  Consequently,  he 
will  pay  a  little  more  for  the  well-known  goods  than 
for  those  he  knows  nothing  about.  If  the  price  be- 
the  same,  he  is  more  likely  to  choose  those  he  knows. 

One  unfamiliar  with  the  complications  of  modern 
business,  can  have  only  a  faint  idea  of  the  enormous 
advantage  this  gives  the  well-known  maker.  It  may 
prevent  another  from  doing  business  at  all.  The  only 
way  in  which  the  new  manufacturer  can  compete  witk 
him  who  has  a  good  name  established,  is  by  making 
a  name  for  himself.  Perhaps  he  attempts  to  do  it  by 
advertising,  in  which  he  must  spend  large  sums.  Per- 


THE    SHARE    OF    GOOD    NAME.  377 

haps  he  does  it  by  allowing  the  retailer  larger  profits. 
Perhaps  he  sends  men  about  the  country  to  explain 
the  merits  of  his  goods  to  merchants  who  will  explain 
them  to  others ;  or,  as  for  example  in  the  early  sew- 
ing-machine trade,  he  sends  men  to  the  customer, 
direct,  to  explain  the  merits  of  his  goods.  The 
manufacturer  whose  goods  are  well  known  may  do- 
all  these  things  in  order  to  maintain  his  reputation, 
but  nevertheless  he  has  a  great  advantage  over  the 
other.  If  the  reputation  of  his  goods  gives  him  a 
large  trade,  this  may  enable  him  to  manufacture 
cheaper ;  and  thus,  though  he  sells  at  the  same 
price  as  his  competitor,  he  may  gain  larger  profits. 
We  have  seen  the  advantage  of  the  division  and  re- 
combination of  labor,  and  of  manufacturing  on  a 
large  scale.  This  great  gain  to  the  world  from  the 
increased  efficiency  of  labor  may  be  absorbed  by  the 
large  manufacturer  on  account  of  his  good  name. 
The  reputation  of  his  goods  enables  him  to  do  a 
large  business,  by  means  of  which  he  can  manufac- 
ture cheaper,  and  sell  at  the  same  price  as  those  who- 
do  a  small  business.  The  reputation  of  his  goods 
may  also  enable  him  to  get  a  slightly  increased  price, 
which,  in  his  large  manufacturing,  may  mean  great 
profits.  One  cent  from  each  of  the  inhabitants  of 
the  United  States  would  mean  1600,000.00,  and 
while  no  person  can  deal  with  every  one  of  this  great 
population,  he  may  deal  with  vast  numbers  of  them  ^ 
and  a  few  cents  additional  from  each  may  mean  a 
great  fortune  annually.  All  this  is  the  result  of  his 
reputation  and  good  name.  Numerous  instances  could 


378'         DISTRIBUTION    OF   PRODUCED   WEALTH. 

be  cited  where  the  good  name  of  an  article  or  business 
could  not  be  purchased  for  a  million  dollars.  This 
good  name  may  have  cost  the  owner  all  or  more 
than  it  is  worth  to  him,  or  it  may  have  cost  less,  or 
be  the  result  of  accident ;  its  advantage  is  the  same 
in  any  case.  The  reputation  of  some  goods  has  been 
made  by  expending  vast  sums  in  advertising.  This 
advertising  may  have  cost  all  the  reputation  is  worth. 
Sometimes  reputations  have  been  built  up  by  dis- 
tributing samples  of  the  goods  free,  and  thus  induc- 
ing the  people  to  use  them  and  ascertain  their  merits. 
More  often  it  has  been  made  by  the  slow  process  of 
selling  as  one  can,  and  trusting  to  the  quality  of  the 
goods  to  make  their  own  reputation ;  and  their  good 
name  may  represent  years  of  patient  industry  and 
effort. 

However  it  may  have  been  obtained,  a  good  name 
is  of  great  value  to  any  producer,  and  enables  him  to 
take  a  share  of  the  product ;  sometimes  a  very  large 
share  ;  often  a  much  larger  share  than  interest.  His 
competitor  must  either  sell  cheaper,  or  sell  less,  or 
expend  great  sums  in  convincing  the  people  that  his 
goods  are  equal  to  the  other.  This  share  of  a  good 
name  is  a  species  of  monopoly.  There  are  good  and 
bad  monopolies,  which  will  be  considered  in  the  next 
chapter. 

Under  the  head  of  "  good  name  "  may,  for  conveni- 
ence, be  included  the  business  terms  "  good  will,"  and 
"business,"  since  they  all  follow  the  same  law,  and 
are  economically  part  of  the  same  share.  The  words 
44  business,"  "  name,"  and  "  good  will,"  frequently 
occurring  in  sales  of  property,  are  parts  of  one  thing. 


THE    SHARE    OF   GOOD    NAME.  379 

The  prospect  of  receiving  this  share  is  frequently- 
sold,  or  "  capitalized,"  and  is  considered  worth  a  sum 
which  if  put  at  interest  would  yield  the  same  annual 
return.  That  is,  if  the  "  good  name  "  of  a  business 
is  worth  $80  a  year,  and  the  rate  of  interest  is  taken 
at  eight  per  cent.,  the  "  good  name  "  is  capitalized  at 
$1,000.  A  large  soap  factory  was  recently  sold  for 
something  over  six  million  dollars.  It  is  not  likely 
that  the  plant  cost  half  that  sum.  The  rest  was  in 
the  "good  name."  In  this  case  the  "good  name" 
had  been  gained  partly  by  advertising,  and  had  cost 
fabulous  sums.  But  the  business  had  the  "  good 
name,"  whether  it  cost  more  or  less  than  it  was 
worth.  The  new  company,  by  keeping  up  the 
quality  of  the  goods,  was  almost  certain  of  the  share 
which  came  from  the  "  good  name  "  of  the  article. 

We  are  to  remember  that  when  "  good  name  "  is 
thus  capitalized,  it  is  not  Produced  Wealth.  Wealth 
is  always  a  material  substance,  and  we  have  been  at 
great  pains  to  use  the  term  Produced  Wealth  in  place 
of  the  indefinite  one  of  "  capital "  where  there  was 
danger  of  misunderstanding.  It  is  best  to  look  at 
things  as  they  are.  Produced  Wealth,  material  sub- 
stance, is  one  thing ;  the  prospect  of  getting  a  share 
of  future  production  on  account  of  the  good  name  of 
a  product  or  an  established  business,  is  another.  They 
should  never  be  confused.  The  one  is  the  share  of 
the  Resources  Produced  by  Industry ;  the  other  is  the 
share  of  "  good  name."  The  nature  of  the  share  is 
not  changed  because  some  persons  estimate  it  in  terms 
of  a  principal  sum  which  would  bring  as  much  if 
placed  at  interest. 


380          DISTRIBUTION    OF   PRODUCED   WEALTH. 

The  share  of  "  good  name  "  is  sometimes  included 
in  the  share  of  profits,  and  sometimes  in  that  of  inter- 
est ;  it  should  be  included  in  neither.  It  is  a  share  by 
itself.  In  an  ordinary  business  which  one  has  built 
up  for  himself,  he  thinks  of  the  share  of  "good  name" 
as  a  part  of  profits.  He  pays  rent,  and  interest,  and 
other  expenses,  and  lumps  the  share  of  "  good  name  " 
in  with  his  own  services  and  compensation  for  risk. 
In  many  lines  of  business  one  can  not  practically  do 
otherwise.  He  makes  more  than  his  neighbor  ;  and 
perhaps  flatters  himself  that  the  result  is  due  to  his 
superior  business  management.  In  reality,  his  larger 
gross  profit  is  in  consequence  of  the  good  name  of 
his  goods,  or  his  own  reputation.  Since  this  "  good 
name  "  is  probably  the  result  of  his  own  business  ef- 
forts, there  is  perhaps  no  reason  why  it  should  not  be 
classed  with  profits,  as  compensation  for  his  past  ef- 
forts. 

When  "  good  name  "  is  "  capitalized,"  the  share 
is  wrongly  credited  to  interest.  Let  us  suppose  a 
soap  factory  which  is  sold  to  a  company  at  a  capitali- 
zation. In  addition  to  the  present  value  of  the  plant 
—what  it  would  cost  to  replace  it  by  a  new  one  as 
well  adapted  to  the  purpose — a  considerable  sum  is 
added  for  the  value  of  the  "  good  name  "  and  "  busi- 
ness." The  new  company  is  expected  to  pay  divi- 
dends on  the  entire  stock,  that  which  represents  the 
value  of  the  plant  as  well  as  that  which  represents 
the  capitalization  of  the  "good  name."  Here  the 
share  of  the  "  good  name  "  is  called  interest.  Wher- 
ever a  "  good  name  "  and  business  is  thus  capitalized, 


THE    SHARE    OF   GOOD   NAME.  381 

its  share  is  included  under  interest.  It  should  be  sep- 
arated. 

The  share  of  "  good  name  "  is,  however,  very  close- 
ly related  to  that  of  Produced  Wealth,  and  in  all 
stock  companies  is  classed  as  capital.  It  may  have 
cost  as  much  as  the  plant ;  and  the  stockholders 
should  have  interest  on  it.  In  the  one  case,  labor  has 
been  expended  in  building  a  factory  and  making  ma- 
chinery ;  in  the  other,  labor  has  been  expended  in 
making  a  good  name  for  the  goods,  and  arranging 
with  others  for  their  sale.  The  labor  would  never 
have  been  expended  except  for  the  hope  of  reward. 
•One  can  not  make  enough  in  one  year  from  the  good 
name  to  pay  what  it  has  cost,  but  he,  or  his  succes- 
sors, may  make  the  interest  on  what  it  has  cost,  for- 
ever. In  this  case  "  good  name  "  is  as  justly  entitled 
to  a  share  as  Produced  Wealth. 

Property  in  "  good  name,"  "  business  "  and  "  good 
will"  should  always  be  distinguished  from  property 
in  material  wealth. 


CHAPTER  IY. 

THE  SHARE  OF  MONOPOLY. 

The  price  at  which  goods  can  be  sold  under  mo- 
nopoly was  necessarily  considered  under  exchange. 
Whatever  is  obtained  in  addition  to  the  natural  price 
under  competition,  is  due  to  monopoly. 

There  is  monopoly  in  production  as  well  as  in  ex- 
change. One  may  be  the  only  producer  in  his  line, 
and  be  able  to  prevent  others  from  engaging  in  the 
manufacture  of  his  class  of  goods.  The  share  of  the 
world's  productions  which  he  will  thus  be  able  to 
obtain  will  be  gained  through  exchange,  in  a  higher 
price  for  his  goods  than  he  would  otherwise  receive. 
This  higher  price,  in  the  end,  comes  out  of  the  con- 
sumer, who  is  probably  engaged  in  some  other  form 
of  production. 

NATURAL  MONOPOLIES. — The  monopolies  most  im- 
portant to  consider  at  present  are  what  have  come  to 
be  known  as  Natural  Monopolies.  By  this  term  we 
do  not  mean  the  monopoly  of  natural  talent,  to  which 
every  one  is  entitled  of  right.  We  mean  necessary 
monopolies — necessary  because,  in  the  nature  of  the 
case,  there  can  be  no  real  competition ;  necessary,  be- 
cause the  service  can  be  so  much  more  cheaply  per- 
formed by  one  company  than  by  two  that  it  is  practi- 
cally necessary  to  give  it  into  the  hands  of  one.  In 
the  case  of  these  monopolies  we  must  abandon  the  idea 

(382  ) 


THE    SHARE   OF   MONOPOLY.  383 

of  competition,  because  it  logically  leads  to  combina- 
tion and  higher  prices.  The  term,  Natural  Monopoly, 
is  now  fixed  and  generally  understood  in  this  sense. 
It  would  be  useless  to  attempt  to  change  it. 

There  are  certain  services,  required  by  the  larger 
portion  of  the  people,  which  can  be  done  on  a  large 
scale  so  much  cheaper  than  on  a  small  one,  that  they 
are  certain  to  be  gathered  into  the  hands  of  one  com- 
pany. Competition  can  not  act  because  the  small  con- 
cern can  not,  in  the  nature  of  the  employment,  com- 
pete with  the  large  one.  Such  is  the  supplying  of 
water  to  cities.  Not  every  person,  but  a  large  portion 
of  the  people,  desire  water  furnished  through  a  system 
of  pipes.  In  a  crowded  city,  it  is  necessary  to  require 
its  use  by  all,  for  the  health  of  all.  If  several  com- 
panies attempt  to  supply  the  city,  it  necessitates  sev- 
eral systems  of  pipes,  each  costing  nearly  as  much  as 
one  which  could  serve  all  equally  well.  If  the  com- 
panies divide  the  city  into  districts,  each  laying  its 
pipes  in  that  district  alone,  then  each  of  such  districts 
has  a  monopoly ;  since  there  oan  be  no  competition 
with  companies  whose  pipes  do  not  reach  that  terri- 
tory. Hence,  rival  water  and  gas  companies  usually 
fight  until  one  destroys  the  other,  at  a  great  waste ;  or 
they  combine,  openly  or  secretly. 

The  most  important  necessary  monopolies  are :  in 
the  cities,  water,  gas,  electric  light,  street-car  lines ;  in 
the  nation,  the  post-office,  telegraph,  express  business, 
and  railroads. 

Doubtless  there  are  many  other  lines  of  business  in 
which  a  monopoly  can  do  the  work  somewhat  cheaper 
25 


384          DISTRIBUTION    OF   PRODUCED   WEALTH. 

than  competition,  but  the  advantage  is  not  sufficient 
to  make  a  monopoly  certain.  It  is  not  true  that  the 
grocery  business  can  be  carried  on  very  much  cheaper 
in  large  than  in  small  establishments.  There  will  al- 
ways be  competition  in  this  business,  without  govern- 
ment interference.  When  competition  acts,  it  'can 
usually  be  trusted  to  give  low  prices.  The  old  praise 
of  competition  was  not  as  an  end,  but  because  it  was 
believed  that  it  was  the  best  means  of  securing  fair 
prices.  When  in  the  nature  of  the  case  it  can  not 
^,ct,  as  with  Natural  Monopolies,  some  other  means  of 
regulating  prices  must  be  found ;  and  there  are  many 
who  see  no  method  save  in  government  control. 

The  share  of  the  world's  productions  which  one  will 
be  able  to  obtain  on  account  of  a  complete  or  partial 
monopoly,  depends  on  the  principles  set  forth  in  con- 
sidering monopoly  as  affecting  Exchange.  One  of 
the  most  important  of  these  is  the  principle  that 
the  price  which  the  monopolist  can  fix  will  depend,  in 
the  first  place,  on  whether  he  is  compelled  to  perform 
the  same  service  to  all  persons  on  the  same  terms,  or 
whether  he  is  permitted  to  charge  different  prices  to 
•different  people.  In  the  former  case,  he  can  obtain 
only  the  value  in  use  to  those  to  whom  his  services  are 
worth  least ;  in  the  latter,  he  can  obtain  the  full  value 
in  use  from  every  person  with  whom  he  deals.  This 
statement  is  so  important  as  to  bear  repetition ;  and  it 
is  one  which  has  usually  been  overlooked  by  political 
economists.  In  other  lines  of  production  competition 
requires  all  goods  to  be  sold  at  something  like  the 
same  price.  A  good  illustration  is  a  railroad  which 


THE    SHARE    OF    MONOPOLY.  385 

has  a  monopoly  of  transportation  at  a  certain  point. 
It  can  charge  different  shippers  different  prices  for  the 
same  service.  It  will,  therefore,  seek  to  get  as  near 
the  value  in  use  to  each  one  as  it  can.  If  it  is  con- 
vinced that  one  person  can  not  afford  to  pay  more — 
that  is,  that  he  will  not  ship,  or  will  go  out  of  the 
business  which  necessitates  shipping  at  the  established 
rates — it  will  give  him  a  reduction;  seeking  to  get 
from  every  person  as  much  as  he  can  afford  to  pay,  or 
the  value  in  use.  Here  is,  certainly,  a  proper  field 
for  legislation,  which  Congress  has  entered  within  the 
last  few  years,  against  great  opposition.  The  princi- 
ple is  that  the  Monopoly  must  sell  to  all  at  the  same 
price ;  that  it  must  perform  like  services  for  different 
persons  at  the  same  rate,  and  that  when  such  services 
vary,  the  rate  shall  not  vary  in  undue  proportion. 

A  monopolist  frequently  meets  with  competition  at 
some  one  point.  Rather  than  lose  the  profit  to  be 
made  here,  he  may  sell  the  goods  as  low  as  he  can 
afford.  If  now  he  can  be  compelled  to  sell  every- 
where at  the  same  price,  his  power  to  obtain  excessive 
prices  is  partly  or  completely  destroyed.  Again  the 
best  illustration  is  a  railway.  At  railway  centers  rates 
are  low,  perhaps  too  low,  because  of  competing  lines. 
But  every  road  passes  through  many  towns  in  which 
there  is  no  other  road ;  and  here  it  can  charge  monop- 
oly prices,  which  are  "  what  the  traffic  will  bear." 
If,  now,  the  road  is  compelled  to  give  the  same  or 
similar  rates  to  all  the  towns  on  the  line  that  it  gives 
to  railway  centers,  the  benefit  of  competition  is  ex- 
tended to  every  station  on  the  line.  If  it  gives  low 


386  DISTRIBUTION    OF   PRODUCED   WEALTH. 

rates  anywhere,  it  must  give  them  everywhere.  If 
the  competing  roads  at  railway  centers  find  rates  are 
too  low,  they  must  raise  them;  but  they  must  not 
compel  other  stations  to  make  up  what  is  lost  at  a 
railway  center:  Competition  at  the  railway  centers  is 
pretty  certain  to  make  rates  low  enough  ;  and  the  ex- 
tension of  these  rates  to  every  station  on  the  line 
would  change  many  railways  from  monopolies  to  com- 
petitive business. 

This  principle  is  the  foundation  for  the  famous 
"long  and  short  haul  clause,"  of  the  Interstate  Com- 
merce law.  This  clause  provides  that  a  road  shall  not 
make  a  greater  charge  for  a  less  distance  in  the  same 
direction,  and  has  met  the  chief  attack  of  railroad 
managers.  Yet  no  juste  r  measure  could  be  devised. 
There  may,  indeed,  be  cases  in  which  it  actually  costs 
the  road  more  to  leave  a  car  fifty  miles  short  of  its 
terminal  than  to  carry  it  through,  but  not  very  much 
more.  Now,  the  principle  of  the  law  is,  as  near  as 
possible,  the  same  price  to  all  for  the  same  service ; 
by  which  a  road  is  compelled  to  fix  uniform  rates  for 
those  who,  in  their  distress,  or  from  lack  of  competi- 
tion, might  be  compelled  to  pay  any  price  the  road 
chose  to  ask.  It  is  thus  intended  to  carry  the  benefit 
of  competition  at  terminal  points  to  every  one  who 
does  business  with  the  company.  It  is  true  this  may 
cause  a  raising  of  rates  at  competing  points ;  but  it  is 
more  important  that  every  one  have  an  equal  chance, 
with  one  price  to  all,  than  that  rates  should  be  low  to 
anybody.  The  Interstate  Commerce  law  is  a  question 
of  practical  statesmanship  ;  and  while  it  has  not  ac- 


THE    SHAKE    OF   MONOPOLY.  387 

complished  all  that  might  be  desired,  its  principles  are 
steps  in  the  right  direction  for  the  control  of  monop- 
oly. It  is  introduced,  here  only  for  the  purpose  of 
illustration,  and  not  for  complete  discussion. 

Most  Natural  Monopolies  may  properly  be  placed 
under  government  control.  Such  control  may  be 
either  by  government  ownership,  or  by  legislation  pre- 
scribing under  what  conditions  the  monopolies  may  be 
carried  on  by  private  parties.  Either  course  appar- 
ently narrows  somewhat  the  sphere  of  private  enter-* 
prise ;  but  such  monopolies  would  otherwise  be  con- 
ducted by  great  corporations,  with  the  management  in 
the  hands  of  a  few  officers,  and  the  number  of  people 
who  would  thus  be  prevented  from  managing  a  busi- 
ness of  their  own  is  insignificant.  Every  business 
which  is  of  the  nature  of  a  natural  monopoly  has 
been  owned  and  controlled  by  government  in  some 
civilized  country.  In  the  United  States,  the  post- 
office  has  always  been  regarded  as  better  in  the  hands 
of  the  government  than  in  those  of  private  parties. 
There  is  110  necessity  for  rival  post-offices  in  the  same 
town.  The  business  is  much  more  economically  man- 
aged under  one  system.  No  private  corporation  would 
have  given  us  our  present  magnificent  postal  system. 
The  government  has  regard  for  the  interests  of  all  the 
people,  to  the  extent  of  making  a  uniform  rate  for  all 
parts  of  the  United  States;  and,  although  there  is 
considerable  difference  in  the  cost  of  carrying  a  let- 
ter from  Boston  to  New  York  or  to  San  Francisco, 
and  a  still  greater  increase  in  the  cost  of  carriage  to 
out-of-the-way  places,  the  encouragement  to  communi- 


388  DISTRIBUTION    OF    PRODUCED    WEALTH. 

cation,  and  the  desire  to  make  the  country  a  more  de- 
sirable place  of  residence,  are  arguments  which  justify 
a  government  in  charging  something  more  than  cost 
in  the  one  case,  and  something  less  in  the  other.  The 
difference  is  more  apparent  than  real,  because  a  uni- 
form rate  enables  the  entire  service  to  be  carried  on 
much  cheaper.  Concerning  the  control  of  this  most 
important  Natural  Monopoly  by  government  owner- 
ship, there  is  no  question  anywhere. 

Railroads  are  frequently  owned  by  the  government 
in  European  states.  In  Austria  the  country  has  been 
divided  into  zones,  and  a  uniform  rate  made  for  each 
zone  without  regard  to  distance,  something  on  the 
principle  by  which  letters  are  carried  in  the  United 
States.  The  uniform  rates,  of  course,  simplify  the 
business,  so  that  the  cost  of  carriage  is  less.  The 
railroad  service  is  not  a  complete  Natural  Monopoly, 
since  there  will  always  be  considerable  competition  at 
large  cities ;  but  it  is  practically  so  at  local  stations, 
and  any  government  would  undoubtedly  be  justified  in 
undertaking  the  management  of  all  the  railroads  in  its 
territory,  if  no  other  means  of  control  can  be  found. 
The  magnitude  of  the  task  in  the  United  States, 
should  make  this  course  a  last  resort.  It  would  be 
far  more  difficult  with  us  than  in  England,  on  account 
of  the  condition  of  our  Civil  Service.  It  would  be  in- 
tolerable that  the  vast  number  of  railway  employe* 
should  be  at  the  mercy  of  a  political  party,  and  so 
many  places  regarded  as  the  spoils  of  an  election.  If 
men  were  appointed,  as  in  England,  on  the  merit  sys- 
tem, wholly  without  regard  to  politics,  the  task  would 


THE    SHARE    OF    MONOPOLY.  38 £ 

be  easier ;   but,  even  then,  it  is  one  we  may  well  shrink 
from. 

The  second  means  of  control  of  a  Natural  Monop- 
oly is  by  prescribing  the  conditions  under  which  it 
may  be  carried  on.  The  State  may  even  require  that 
certain  things  be  done  for  the  good  of  the  whole  coun- 
try, although  a  railroad  may  be  compelled  to  charge- 
more  than  cost  of  carriage  in  some  instances  to  make 
up  the  loss.  For  example,  it  is  greatly  to  the  interest 
of  the  United  States  to  build  up  the  smaller  towns, 
and  to  prevent  the  massing  of  dense  populations  in 
cities.  We  may,  therefore,  require  a  railroad  to  per- 
form the  same  service  for  all  persons  at  the  same 
price,  to  give  a  small  town  the  same  rates  as  a  larger 
one  for  the  same  distance,  and  to  make  the  same  price 
to  him  who  ships  a  single  car  as  to  him  who  ships  a, 
dozen.  The  road  can  make  its  average  rates  high 
enough  to  cover  the  cost.  The  solution  of  the  rail- 
road question  is  likely  to  be  found  in  the  principle 
that  roads  must  perform  like  services  for  all  persons 
on  the  same  terms;  and  must  not  give  lower  rates 
to  either  large  cities  or  large  shippers.  The  entire 
traffic  of  the  road  will  thus  be  regulated  by  the  rates 
at  railroad  centers,  where  competition  will  be  likely  to 
keep  them  within  reasonable  limits.  The  courts  of 
some  States  have  gone  further,  and  ruled  that  rates 
must  be  reasonable.  What  is  reasonable  is,  of  course, 
a  question  of  fact  for  a  jury.  This  legislation  is  based 
on  the  old  common  law  for  common  carriers ;  but  the 
economic  principle  for  its  justification  is  found  in  the 
fact  of  the  Natural  Monopoly,  which  practically  pre- 


390  DISTRIBUTION    OF    PRODUCED    WEALTH. 

vents  competition  from  regulating  rates  at  all  points, 
and  to  all  persons.  There  is  competition  enough  at 
some  points ;  but  for  the  greater  part  of  its  stations, 
the  road  has  a  Natural  Monopoly.  The  tendency  is 
also  toward  consolidation,  and  while  competition  exists 
at  railroad  centers,  at  present,  all  roads  may  at  some 
time  in  the  future  form  parts  of  one  great  system. 
If  so,  the  Natural  Monopoly  would  be  coihplete. 

If  it  be  asked  why  similar  regulations  should  not 
be  made  in  all  lines  of  business,  the  obvious  reply 
is,  that  outside  of  monopolies  competition  is  a  suffi- 
cient regulator  of  prices,  and  that  such  regulation 
might  destroy  the  business.  If  the  law  compels  a 
Natural  Monopoly  to  perform  some  service  for  less 
than  cost,  that  all  citizens  may  have  an  equal  chance, 
the  very  fact  that  the  monopoly  is  without  competition 
enables  it  to  fix  its  average  rate  high  enough  to  cover 
such  loss.  We  do,  however,  make  other  regulations 
for  various  lines  of  business  when  the  public  interest 
demands  it. 

In  the  United  States,  the  post-office  and  the  rail- 
roads may  be  said  to  be  at  the  two  extremes  of  Nat- 
ural Monopolies.  The  first  we  are  controlling  by 
government  ownership;  the  other  we  are  attempt- 
ing to  control  by  such  regulations  as  the  Interstate 
Commerce  law.  Between  these  two  lie  water-works 
and  gas-works  for  cities,  street-car  lines,  the  express 
business,  the  telegraph,  etc.  It  is  now  pretty  gener- 
ally agreed  that  water-works  are  best  under  city  man- 
agement. A  few  cities  have  recently  built  their  own 
gas-works.  In  others,  legislation  practically  fixes  the 


THE    SHARE    OF    MONOPOLY.  391 

price  of  gas.  The  last  is  an  unsafe  plan;  there  is 
danger  of  practical  confiscation  of  the  property  on  the 
one  hand,  and  of  allowing  enormous  margins  for 
profit  on  the  other — profits  which  no  man  could  make 
in  a  business  influenced  by  real  competition.  Street- 
car lines  are  controlled  in  most  cities  by  roughly  fix- 
ing the  fare  at  five  cents  ;  a  convenient  sum  to  handle, 
but  one  which  gives  great  opportunity  for  profit  or 
loss.  There  is  yet  considerable  competition  among 
telegraph  lines,  but  they  are  a  Natural  Monopoly 
which  could  be  carried  on  much  cheaper  under  one 
management.  There  has,  on  this  account,  been  a 
strong  demand  for  a  postal  telegraph,  which  means 
government  ownership. 

GOVERNMENT  CONTROL  OF  NATURAL  MONOPOLIES 
NOT  SOCIALISM. — It  is  probably  good  statesmanship 
to  bring  all  Natural  Monopolies  under  government 
control,  but  government  control  does  not  require  gov- 
ernment ownership  or  management.  The  Interstate 
Commerce  law  brings  the  railroads  to  a  considerable 
extent  under  government  control.  It  would  be  possi- 
ble to  leave  them  in  the  hands  of  private  owners,  and 
at  the  same  time  secure  fair  rates  of  charges.  The 
essential  thing  about  fair  rates  is  not  so  much  low 
charges  as  equality,  so  that  no  person  or  corporation 
can  secure  an  improper  advantage  over  another.  We 
may  require  railroads  to  do  business  in  a  certain  way 
for  the  good  of  the  people  ;  but  beyond  necessary  reg- 
ulations, they  should  be  free  to  manage  their  business 
as  they  please.  We  may  say,  We  expect  you  to 
make  a  reasonable  profit ;  but  you  must  make  it  in 


392  DISTRIBUTION    OF    PRODUCED    WEALTH. 

certain  ways,  and  you  must  not  make  it  by  methods 
contrary  to  the  good  of  the  whole  people.  In  return 
for  this  limitation,  the  government  is  able  to  protect 
different  companies  from  the  effects  of  their  own 
natural  competition,  where  it  would  be  destructive, 
either  to  the  roads  or  to  reasonable  profits. 

This  is  not  Socialism,  which  would  destroy  every 
one's  power  to  engage  in  business  for  himself.  It 
takes  only  a  limited  number  of  lines  of  business  out 
of  the  hands  of  private  control ;  and  those  lines  are 
certain  to  go  into  the  hands  of  some  monopoly,  any 
way.  If  a  business  is  of  such  a  nature  that  it  must 
be  controlled  by  a  monopoly,  most  people  will  prefer 
that  that  monopoly  be  the  government.  Individual- 
ism does  not  prevent  the  formation  of  partnerships. 
When  a  city  is  to  be  supplied  with  water,  it  does  not 
destroy  Individualism  for  the  people  to  engage  in  a 
partnership  to  furnish  themselves  with  water.  Indi- 
vidualism only  demands  that  all  lines  of  business 
which  are  adapted  to  private  management  shall  be  re- 
served for  private  enterprise.  Government  ownership 
of  railways  may  be  very  objectionable,  but  such  own- 
ership is  not  Socialism,  nor  a  step  toward  Socialism. 
A  railway  employe  would  have  the  same  liberty  in  the 
service  of  the  government  as  in  the  service  of  a  great 
corporation.  The  equalizing  of  rates  would  give  op- 
portunity for  many  small  lines  of  business  where  the 
production  is  now  in  the  hands  of  a  monopoly.  Gov- 
ernment ownership  of  railways  would  probably  tend  to 
an  increased  number  of  independent  producers.  The 
objections  to  it  are  the  necessary  extension  of  govern- 


THE    SHARE    OF    MONOPOLY.  393 

mental  powers,  the  vast  increase  in  the  number  of 
offices  to  become  the  spoils  of  every  political  election, 
and  the  opportunities  for  swindling  the  government 
which  it  would  afford.  Government  ownership  is 
common  in  Europe,  and  is  a  question  of  practical 
statesmanship  ;  but  the  American  people  hope  to  find 
a  better  way  of  securing  just  and  equal  rates  for  all. 

The  price  at  which  any  monopoly  can  sell  its  goods 
depends  on  the  principles  set  forth  in  the  chapter  on 
"  Monopoly,"  in  the  book  on  "  Exchange."  A  part  of 
this  price — usually  the  greater  part,  and  frequently 
nearly  the  whole  of  it — is  what  would  be  obtained 
under  competition.  The  excess,  only,  is  the  share  of 
Monopoly.  But  while  the  percentage  of  the  price 
which  is  due  to  monopoly  may  be  very  small,  the  ag- 
gregate share  of  a  monopoly  is  frequently  very  large. 

A  recent  form  of  monopoly  is  known  as  the  Trust, 
which  is  simply  a  combination  of  men  who  would 
naturally  be  competitors.  The  prices  which  they  can 
obtain  for  their  goods  are  shown  under  "  Combina- 
tion," in  the  book  on  Exchange.  All  that  is  obtained 
over  the  natural  price  under  competition,  is  the  share 
of  Monopoly. 

CAPITALIZATION. — Monopolies  are  sometimes  capi- 
talized, though  not  so  frequently  as  "  good  name." 
Some  forms  of  monopoly  are  not  so  certain  to  return 
a  future  income.  When  a  patent  right  is  sold,  the 
monopoly  is  capitalized,  but  as  it  is  expected  to  expire 
in  a  few  years,  the  capitalization  must  be  such  as  is 
expected  to  pay,  not  only  interest,  but  the  principal, 
within  the  time  the  right  has  to  run.  To  a  certain 


394          DISTRIBUTION    OF    PRODUCED    WEALTH. 

extent,  this  is  true  of  all  capitalization.  If  one  has  a 
monopoly  of  any  kind  of  production,  or  any  service 
which  he  can  transfer,  it  can,  of  course,  be  capital- 
ized and  sold. 

The  truth  that  must  not  be  forgotten  is,  that  such 
capitalization  is  not  material  wealth.  It  does  not 
come  under  the  head  of  "Resources  Produced  by 
Human  Industry,"  which  are  always  material.  Such 
capitalization  represents  only  one's  right  to  a  share  of 
the  world's  production,  or  perhaps  only  his  power  to 
take  a  share.  It  does  not  increase  the  resources  for 
the  satisfaction  of  wants.  The  apparent  wealth  of  the 
country  is  often  vastly  augmented  by  the  mere  draw- 
ing of  certain  papers,  but  there  is  .no  more  real  wealth 
than  before.  One  may  be  making  great  profits  out 
of  a  soap  factory,  by  reason  of  its  "  good  name  "  and 
monopolies  secured  by  letters  patent  and  otherwise. 
Now,  to  call  the  "  good  name  "  and  monopoly  of  this 
factory  worth  a  million  dollars,  does  not  increase  the 
wealth  of  the  country.  If  we  call  it  capital,  then 
capital  is  not  always  material  wealth.  It  was  for  this 
reason  that  we  treated  of  the  "  Share  of  Produced 
Wealth,"  in  a  former  chapter;  and  did  not  treat  of  a 
share  of  Capital.  Capital  is  too  indefinite  for  our 
purposes.  By  "Produced  Wealth,"  or  the  "  Ke- 
sources  Produced  by  Industry,"  we  know  what  we 
mean. 

We  do  not  always  separate  the  share  of  Monopoly 
from  the  other  shares  which  may  fall  to  the  same  in- 
dividual or  company  ;  and  the  share  of  Monopoly  is 
not  found  in  the  product,  as  it  comes  from  a  factory, 


THE    SHARE    OF    MONOPOLY.  395 

but  in  its  exchange  for  other  things.  Of  the  money 
(representing  a  share  in  all  the  world's  products) 
which  the  monopolist  receives  in  exchange  for  his  prod- 
uct or  service,  a  considerable  part  represents  rent ;  an- 
other portion  is  the  share  of  interest  ;  the  largest 
amount,  probably,  represents  labor,  or  wages  paid  for 
labor  ;  and  another  share,  the  profits  of  business  man- 
agement. The  share  which  comes  to  one  on  account 
of  monopoly  is  clear  gain ;  it  is  so  much  more  than 
other  men  can  make  in  the  same  line  of  business. 

There  are  good  and  bad,  just  and  unjust,  monopo- 
lies. The  monopoly  of  personal  talent  is  the  highest 
right  in  the  world  ;  it  is  the  right  of  the  laborer  to 
the  result  of  his  own  labor.  Nobody  begrudges 
Joseph  Jefferson  the  income  he  receives  from  his  mo- 
nopoly of  playing  Rip  Van  Winkle  as  110  other  living 
being  can  play  it.  No  one  is  compelled  to  see  him  ; 
and  the  actor  can  honestly  make  the  price  of  witness- 
ing the  performance  as  high  as  he  pleases.  The  mo- 
nopoly of  "  good  name  "  is  not  only  the  right  of  the 
possessor,  but  is  in  the  highest  degree  conducive  to 
the  interests  of  the  people.  It  encourages  honest 
goods.  The  producer  is  anxious  to  make  a  name 
which  will  lead  people  to  buy  of  him  again.  If  all 
men  were  honest,  and  the  stamp  on  any  piece  of  goods 
a  guarantee  that  they  are  precisely  as  described, 
a  good  name  would  be  worth  less  than  now,  because 
more  common.  The  share  of  the  world's  produce 
which  it  pays  for  the  good  name  of  certain  goods,  is 
partly  a  penalty  for  the  unreliability  of  dealers.  It 
is  the  cost  of  protection  against  the  swindlers  and  the 
incompetent. 


396  DISTRIBUTION    OF    PRODUCED    WEALTH. 

The  share  of  Natural  Monopolies  is  a  very  large 
one  ;  not  because  they  are  numerous,  but  because  they 
serve  so  many  people,  and  take  something  from  each 
one.  Frequently,  the  sum  they  draw  is  much  larger 
than  that  of  all  others  combined,  except  the  share  of 
labor.  Next  to  the  rise  in  value  of  land,  they  are  the 
chief  means  by  which  large  fortunes  have  been  accu- 
mulated. 


CHAPTER  V. 

THE  SHARE  OF  THE  PRODUCER  —  PROFITS  OF  PRO- 
DUCTION. 

We  now  come  to  the  great  share  of  economic  labor. 
Rent  must  be  paid.  Interest  on  Produced  Wealth 
used  in  production  is  justly  due,  and  must  be  paid  if 
the  stock  of  Produced  Wealth  is  to  be  kept  up,  and 
production  is  to  be  carried  on  economically.  The 
owner  of  a  good  name  will  be  able  to  obtain  a  larger 
share  of  the  world's  goods  in  exchange  for  the  goods 
he  makes  on  account  of  it ;  and  is  justly  entitled  to 
this  share.  The  monopolist  can  always  take  a  share, 
larger  or  smaller,  on  account  of  his  monopoly  ;  and  is 
often  justly  entitled  to  it.  Usually,  however,  we  seek 
to  reduce  this  share  ;  but  it  is  frequently  impossible  to 
do  away  with  it,  without  destroying  the  right  of  prop- 
erty, and  losing  more  than  we  would  gain.  Methods 
of  reducing  it,  and  abolishing  it  in  some  cases,  have 
already  been  considered. 

After  these  shares  are  taken,  all  else  belongs  to  La- 
bor. But  it  is  to  be  remembered  that  we  are  using  the 
word  "  labor  "  in  the  economic  sense,  not  in  the  popu- 
lar sense  of  "workingman."  It  includes  every  effort 
of  mind  or  hand  for  the  satisfaction  of  wants.  The 
classes  of  laborers  in  this  sense  are  so  many,  and  so 
widely  separated,  that  it  does  not  help  us  much  to  say, 
:as  did  some  of  the  older  economists,  '*  so  much  be- 

(397; 


398          DISTRIBUTION    OF   PRODUCED   WEALTH. 

longs  to  the  laborer."  In  this  and  the  following 
chapters  we  shall,  therefore,  study  the  shares  of  the 
various  classes  of  laborers.  It  will  be  necessary  to  use 
the  term  "  laborer  "  sometimes  in  the  economic  sense, 
and  sometimes  in  the  narrower  popular  meaning ;  but 
the  connection  will  be  such  that  the  reader  can  not 
misunderstand. 

After  paying  rent  and  interest,  the  shares  of  land, 
Produced  Wealth,  good  name  and  Monopoly,  all  else 
belongs  to  the  Producer,  to  him  who  engages  in  pro- 
duction, taking  its  risks  for  the  sake  of  its  profits.  If 
the  manual  laborers  themselves  engage  in  business  en- 
terprise, as  in  a  co-operative  factory,  they  are  the  pro- 
ducers and  this  share  is  theirs.  The  farmer  usually 
owns  his  land  and  stock,  and  carries  on  business  for 
himself ;  hence  the  entire  product  belongs  to  him.  If 
he  is  a  "  renter,"  he  pays  rent  for  the  land,  and  prob- 
ably interest ;  and  the  remainder  of  the  product  is 
his.  If  he  works  the  land  "  on  shares,"  he  may  give 
as  much  as  a  third  of  the  product  for  rent. 

When  the  undertaker  of  any  business  employs  men, 
paying  wages  for  their  labor,  he  steps  into  their  place, 
succeeds  to  their  rights,  and  has  labor's  share  of  the 
product.  The  ownership  by  each  man  of  himself,  and 
his  right  to  his  own  labor,  implies  the  right  to  sell 
that  labor  as  well  as  to  carry  on  production  on  his  own 
account.  Often  he  can  get  more  for  his  labor  than 
he  could  produce ;  and  there  is  no  difference  in  prin- 
ciple between  selling  his  labor  and  the  product  of  his 
labor.  A  shoemaker  in  a  small  shop  makes  and  sells 
shoes ;  the  shoemaker  in  a  large  factory  sells  his  labor 


THE  SHARE  OF  THE  PRODUCER.        399 

to  be  employed  in  making  shoes,  because  he  can  get 
more  for  his  labor  than  he  could  for  all  the  shoes  he 
could  make  by  himself.  Said  a  Socialist,  "  That 
building  belongs  to  the  workmen  who  built  it."  Said 
a  man  in  the  crowd,  "  I  laid  brick  on  that  building 
for  four  dollars  a  day,  and  the  building  belongs  to  the 
man  who  paid  me  the  four  dollars."  Certainly ;  what 
else  did  he  pay  him  the  four  dollars  for  ?  If  the  work- 
man wanted  to  put  up  a  building  for  himself,  wha 
would  hinder?  But  what  idiot  would  pay  four  dol- 
lars a  day  for  nothing? 

The  man  who  pays  the  wages  concentrates  in  him- 
self all  the  risk,  and  all  the  chance  of  gain  of  per- 
haps a  hundred  laborers.  He  must  sell  the  product 
under  the  laws  of  Exchange  ;  and  many  men  are  com- 
pelled to  sell  it  for  less  than  they  have  paid  in  rent, 
interest  and  wages.  If  this  loss  or  profit  were  divided 
among  the  hundred  laborers,  it  might  be  only  a  small 
percentage  on  the  yearly  wages  of  each  one ;  but 
when  it  is  concentrated  into  single  hands,  and  falls  on 
one  person,  the  loss  or  profit  may  be  very  large.  The 
taking  of  such  risk  seems  necessary.  It  is  not  gam- 
bling, though  the  chances  are  sometimes  as  great  as  in 
gambling.  It  is  legitimate  and  honest  business,  con- 
ducted for  the  good  of  the  nation.  When  one  en- 
gages in  business,  he  must  take  the  chances  of  a  good 
many  things  he  can  not  control,  as  well  as  of  his  own 
ability  in  management.  A  very  little  variation  may 
make  the  difference  between  bankruptcy  or  a  fortune. 
Co-operation  is  the  only  way  of  avoiding  the  throwing 
of  this  risk  on  a  very  few  persons,  and  co-operation 
26 


400          DISTRIBUTION    OF   PEODUCED    WEALTH. 

lias  not  yet  demonstrated  its  practicability.  It  is  easy 
enough  for  one  to  divide  his  profits,  when  he  makes 
any,  among  his  employes,  but  no  one  will  consent  to 
share  his  losses ;  and  no  one  can  afford  to  take  risk 
without  the  chances  of  profit. 

By  the  Producer,  we  understand  the  one  who  under- 
takes the  production  of  goods,  succeeding  to  the  share 
of  all  laborers  to  whom  he  pays  wages.  It  is  not  easy 
to  find  a  good  name  for  him.  In  French  he  could  be 
called  the  entrepreneur.  Prof.  Francis  A.  Walker 
suggested  that  he  could  naturally  be  called  the  "  un- 
dertaker "  were  this  word  not  now  used  in  the  sense  of 
funeral  director.  The  word  "  undertaker "  may  yet 
•come  into  use  to  signify  the  one  who  undertakes  any 
business  on  his  own  account,  taking  its  risks,  being 
responsible  for  it,  and  having  its  control  with  all  loss 
or  profit  after  paying  rent  and  interest,  and  other 
shares.  He  has  here  been  called  the  "  Producer," 
because  he  engages  in  production,  and  succeeds  to  the 
share  of  all  other  laborers  to  whom  he  pays  wages. 
The  share  of  the  Producer  is  what  is  left  after  paying- 
all  other  shares  and  wages  (either  in  the  payment  of 
labor  direct  or  as  represented  in  the  purchase  of  ma- 
terial), and  is  called  Profits. 

Profits  consist  of  two  elements ;  the  first  is  compen- 
sation for  the  risk  of  business,  and  includes  "  good 
and  bad  luck  "  ;  and  the  second  is  the  result  of  one's 
own  skill  and  business  management.  The  risk  of 
business  we  have  already  seen.  There  is  a  certain 
-amount  of  good  and  bad  luck  in  the  world.  Of  two 
men  who  work  equally  hard  and  manage  equally  well. 


THE  SHARE  OF  THE  PRODUCER.       401 

one  succeeds  through  good  luck,  and  the  other  fails 
through  bad  luck.  The  result  comes  from  unforeseen 
causes,  often  causes  which  nobody  could  .  foresee. 
There  is  an  effort  among  business  men  to  reduce  the 
risk  from  fire,  and  loss  by  sea,  by  means  of  insurance ; 
but  insurance  can  not  touch  those  more  remote  hap- 
penings on  which  the  success  or  failure  of  business 
often  depends.  And  the  failures  are  numerous.  We 
are  dazzled  by  the  success  of  the  few,  and  do  not 
notice  the  failure  of  the  many. 

The  second  element  of  profits  is  the  direct  result  of 
the  economic  labor  of  the  "  undertaker "  of  the  busi- 
ness ;  and  he  is  as  much  entitled  to  it  as  any  laborer 
to  his  own  labor.  He  adds  so  much  to  the  satisfac- 
tion of  human  wants.  Men  differ  widely  in  their 
ability  to  manage  a  business.  Enterprises  are  con- 
tinually failing;  and  others  just  live  along,  paying 
rent,  interest,  and  current  wages,  but  afford  the  owner 
perhaps  less  than  he  could  get  as  wages.  Still,  the 
demand  for  goods  maintains  the  price  just  high 
enough  to  keep  what  we  may  call  these  no-profit 
establishments  running.  But  in  some  corner  of  the 
country  we  see  a  man,  who  is  producing  the  same  kind 
of  goods  of  equal  desirability,  paying  the  same  wages 
and  selling  at  the  same  price  ;  but  who  is  making  a 
fortune  each  year,  when  others  can  hardly  make  both 
ends  meet.  This  man  may  not  labor  two  hours  a  day. 
It  does  not  matter,  so  that  he  manages  that  great 
business  as  he  does.  Goods  are  probably  cheaper 
than  they  would  be  without  him.  Laborers  get  more 
than  they  could  make  for  themselves.  His  manage- 


402          DISTRIBUTION    OF   PRODUCED    WEALTH. 

ment  enables  more  goods  to  be  produced  with  the 
same  effort.  This  is  the  result  of  his  economic  labor. 
This  is  his  profit.  The  Producer  does  not  get  wages, 
but  profits.  He  pays  all  other  shares,  and  takes  what 
is  left ;  and  what  is  left  depends,  apart  from  risk,  on 
his  own  economic  labor  in  the  direction  of  the  busi- 
ness. His  management  may  make  this  residue  fabu- 
lous sums,  and  nobody  else  have  any  less  than  if  the 
management  were  in  less  competent  hands;  with  no 
profits  at  all. 

Of  two  farmers  with  the  same  kind  of  land,  and 
who  work  equally  hard,  one  gets  rich,  and  the  other 
barely  makes  a  living.  In  a  factory  with  an  expense 
of  a  hundred  thousand  dollars  a  year,  one  owner  may 
save  ten  per  cent,  over  any  one  else  in  the  business. 
The  difference  is  in  the  men;  and  each  man  owns 
himself,  and  his  own  labor. 

From  this  it  is  evident  that  there  will  always  be 
profits  as  long  as  there  is  a  difference  in  the  business 
ability  of  men.  The  entire  production  of  a  nation  can 
not  be  carried  on  by  half  a  dozen  of  the  most  superior 
"undertakers."  No  one  knows  who  are  the  most 
competent  except  after  long  trial.  The  risk  of  all 
business  in  the  hands  of  a  few  men  is  too  great.  It  is- 
far  better  for  the  country  that  production  should  be  in 
many  hands.  New  men  of  ability  are  continually  be- 
ing developed,  and  others  are  dropping  out.  Produc- 
tion is  already  concentrated  in  too  few  hands.  It 
would  be  better  if  we  had  more  small  concerns.  But 
if  the  concerns  managed  with  a  fair  degree  of  ability 
just  pay  expenses,  all  below  them  will  fail ;  and  all 


THE  SHARE  OF  THE  PRODUCER.       403 

which  are  better  managed  will  pay  a  profit.  The 
goods  will  sell  in  the  same  market  at  the  same  price. 
The  most  superior  management  will  secure  large 
profits,  which  represent  its  superiority  over  the  factory 
that  just  pays  expenses.  If  we  could  arbitrarily  raise 
wages,  or  lower  the  price  of  the  goods,  the  factories 
just  paying  would  be  forced  into  bankruptcy;  and 
there  would  not  be  goods  enough  to  supply  the  de- 
mand at  the  new  prices  ;  else  the  best  factories  would 
increase  their  output,  and  the  production  be  cpncen- 
trated  into  fewer  hands,,  until  they  were  few  enough  to 
become  a  Monopoly — and  then  we  have  monopoly 
prices.  This  element  of  profits  represents  the  differ- 
-ence  between  the  ability  of  different  Producers. 

Profits  are  limited  by  competition.  The  share  of 
Monopoly  is  not  profits,  and  has  been  considered  in  a 
previous  chapter.  Men  are  so  anxious  to  be  in  busi- 
ness for  themselves  that  they  are  willing  to  do  busi- 
ness on  very  small  returns.  Wherever  there  is  a 
chance  to  make  large .  profits,  there  is  a  rush  of  pro- 
ducers. It  is  this  competition  which  keeps  profits 
down,  so  that  the  ordinary  man  must  conduct  his  bus- 
iness with  no  more  than  ordinary  wages,  and  often 
with  less.  The  extraordinary  profits  are  due  to  great 
superiority  in  business  management,  and  to  the  good 
luck  which  comes  to  some  men  as  a  result  of  the  risk 
which  ruins  others.  The  man  who  makes  an  improve- 
ment in  business  methods  usually  gains  a  correspond- 
ing profit  for  a  few  years  or  months,  until  his  methods 
can  be  imitated  by  others,  when  his  profits  sink  to  the 
normal,  and  the  gain  all  goes  to  the  consumer. 


404          DISTRIBUTION    OF   PRODUCED   WEALTH. 

The  management  spoken  of  in  this  chapter  is  that 
of  the  owner,  or  "undertaker,"  of  the  business — the 
Producer.  He  may  employ  many  superintendents, 
whose  salaries  will  be  fixed  by  the  laws  of  Exchange. 

Other  minor  elements  enter  into  profits,  and,  there- 
fore, the  only  definition  which  covers  them  is,  What 
is  left  after  paying  all  other  shares.  What  at  first 
may  be  thought  to  be  included  in  profits  may  belong 
to  good  name  or  monopoly. 

The  question  may  be  asked,  Do  not  profits  include 
the  enormous  gain  from  the  Division  of  Labor,  and 
from  modern  methods  of  production  ?  Not  at  all. 
This  great  gain  shows  itself  in  lower  prices  of  goods, 
in  balancing  the  continually  increasing  share  of  rent, 
and  in  higher  wages.  The  people  should  get  the  ben- 
efit of  improved  methods  of  production,  and  they  get 
it  in  lower  prices,  except  where  the  business  is  pro- 
tected by  monopoly ;  and,  even  then,  the  monopoly 
can  seldom  get  more  than  a  small  fraction  of  the  gain. 
Under  competition  there  will  always  be  business  con- 
ducted with  no  profit,  no  matter  how  great  the  im- 
provement in  production  may  be.  Prices  will  simply 
be  lower.  Profits  will  be  found  in  the  better  man- 
aged and  more  fortunate  establishments,  which  are 
able  to  make  something  at  the  same  prices  at  which 
some  establishments  just  pay  expenses,  rent,  interest, 
and  wages  to  the  employes. 

Profits  are  not  always  legitimate.  If  the  shoe  man- 
ufacturer uses  pasteboard  insoles  instead  of  leather, 
the  little  that  he  may  save  is  the  result  of  fraud.  He 
has  robbed  the  consumer,  and  taken  a  larger  share  of 


THE    SHARE    OF   THE    PRODUCER.  405 

the  world's  production  than  belongs  to  him.  It  is 
probable  that  the  great  success  of  many  men  in  amass- 
ing wealth  is  due  to  swindling  rather  than  to  legiti- 
mate profits.  The  swindle  lies,  not  in  making  as  good, 
goods  as  other  people  at  less  cost,  but  in  making  arti- 
cles which,  while  they  appear  to  be  as  good,  are  really 
not  worth  half  the  money.  They  do  not  wear  as  long 
as  honest  goods,  or  do  not  satisfy  wants  as  well  while 
they  last.  Yet  the  customer  can  not  distinguish  by 
their  appearance  before  using.  Let  there  be  two 
trunks,  for  example  ;  one  will  stand  twice  as  much 
handling  as  the  other,  and  perhaps  required  fifty  per 
cent,  more  labor  to  make.  But,  while  they  could 
readily  be  distinguished  by  an  expert,  a  customer,  who 
buys  a  trunk  only  a  few  times  in  the  course  of  his 
life,  can  not  detect  any  difference.  Of  course,  he 
takes  the  cheaper.  He  pays  a  little  less,  but  he  has 
been  swindled  out  of  half  his  money.  The  manufac- 
turer has  not  made  as  much  as  the  customer  has  lost, 
but  he  has  made  nearly  fifty  per  cent,  more  than  his 
honest  rival.  Wealth  accumulated  in  this  way  is 
simple  robbery.  What  one  gains  another  loses,  and 
the  victim  usually  loses  twice  as  much  as  the  swindler 
gains. 


CHAPTER  VI. 

THE  SHARE  OF  THE  MERCHANT  —  PROFITS  OF  EX- 
CHANGE. 

In  the  last  chapter  we  considered  the  share  of  the 
producer,  and  now  turn  to  the  share  of  those  who 
conduct  the  world's  exchanges.  Both  are  profits. 
Yet  the  work  of  exchange  is  so  different  from  that  of 
production,  that  unless  the  two  kinds  of  profits  are  dis- 
tinctly separated,  the  reader  is  in  danger  of  overlook- 
ing either  the  one  or  the  other. 

The  share  of  the  merchant  is  partly  a  share  of  La- 
bor, and  partly  compensation  for  risk.  The  mer- 
chant is  a  laborer  in  the  economic  sense ;  that  is,  his 
efforts  aid  in  the  satisfaction  of  wants.  He  is  the 
distributer  of  the  world's  productions  to  those  who 
need  them.  And  this  labor  is  no  less  important  than 
that  of  the  producer.  The  Chinese  grow  tea,  nearly 
•enough  for  all  the  world.  But  how  is  a  family  to  get 
ihe  pound  it  desires  for  present  use?  Some  one  must 
go  to  China,  get  the  tea,  bring.it  to  America,  and  dis- 
tribute it  to  those  who  desire  it,  giving  to  each  that 
one  of  the  many  varieties  he  prefers.  More  than  this, 
"he  must  tell  the  people  what  the  taste  of  each  pound 
of  the  tea  will  be.  A  consumer  can  not  try  it  before 
buying  ;  but  the  merchant  tries  it — employs  men  to 
<lraw  it  and  taste  it  for  the  consumer.  The  merchant 
sees  to  it  that  the  teas  are  properly  classified — by 
taste.  ( 406 ) 


THE  SHARE  OF  THE  MERCHANT.       407 

The  right  of  the  members  of  a  co-operative  shoe 
factory  to  the  result  of  their  labor  means  the  right  to 
the  shoes  they  have  made ;  but  their  right  is  only  to 
the  shoes,  and  not  to  anything  produced  by  other  peo- 
ple, or  to  any  specified  sum  of  money.  Now,  the  labor 
of  distributing  these  shoes  to  those  who  want  them,  con- 
vincing them  that  they  are  the  sort  of  shoes  they  need, 
and  getting  money  for  them,  may  be  as  great  as  that 
required  to  make  the  shoes.  There  are  many  lines  of 
manufacture  where  the  labor  of  selling  is  actually 
greater  than  that  of  making,  especially  where  a  new 
kind  of  goods  is  introduced,  and  their  merits  must  be 
explained.  This  is  the  labor  of  exchange.  The  cost 
of  exchange — of  getting  tea  from  China,  and  distrib- 
uting it  to  the  consumers ;  of  taking  the  product  of 
every  factory,  and  distributing  it  with  as  little  loss  as 
possible  among  those  who  want  it;  and  conducting 
the  exchanges  so  that  each  man  shall  be  able  to  get 
something  of  everything  he  wants  in  exchange  for  the 
products  which  he  manufactures  —  this  cost  of  ex- 
change consists  of  rents  on  the  land  used  by  stores 
and  railways ;  of  interest  on  the  enormous  capital  in- 
vested ;  and  of  a  vast  amount  of  highly  skilled  labor, 
that  of  clerks  in  retail  and  wholesale  stores,  book- 
keepers, bank  clerks,  etc.  The  business  ability  re- 
quired in  carrying  on  the  exchanges  of  a  country  is, 
perhaps,  greater  than  that  demanded  in  the  produc- 
tion of  all  its  goods. 

Profits  in  Exchange  are  precisely  what  they  are  in 
Production.  They  are  what  the  merchant  has  left 
after  paying  all  other  shares  and  expenses.  The 


408  DISTRIBUTION    OF   PRODUCED    WEALTH. 

owner  of  a  ship  in  the  Chinese  trade  pays  rent  for  the 
land  he  may  use  at  a  private  dock,  pays  interest  on 
the  cost  of  the  ship,  pays  the  wages  of  the  captain  and 
the  crew,  pays  the  Chinese  producer  for  the  produc- 
tion of  the  tea;  and  sells  it  for  what  he  can  get.  If 
he  has  anything  left  after  paying  the  expenses,  that  is 
profit.  The  retailer  buys  the  tea  of  the  wholesaler ; 
pays  rents  for  the  ground  on  which  his  store  stands, 
pays  interest  on  the  capital  required  to  keep  a  stock 
on  hand  until  it  is  wanted,  pays  for  the  labor  of  trans- 
portation, pays  for  the  labor  of  his  clerks ;  and  retails 
the  tea  at  a  higher  price  than  it  cost  him.  After  pay- 
ing all  expenses  out  of  the  difference,  what  he  has  left 
is  net  profit.  It  is  compensation  for  his  risk,  and  a  re- 
turn for  his  own  skill  and  labor  in  the  management  of 
the  business — in  selecting  such  goods  as  his  customers 
are  likely  to  want,  buying  them  low,  keeping  them  in 
good  condition,  etc. 

Merchants  usually  speak  of  the  difference  between 
the  wholesale  and  the  retail  price,  as  profit.  For  con- 
venience this  may  be  called  gross  profit ;  out  of  it 
must  be  paid  all  the  shares  of  rent,  interest,  labor,  etc. 
The  remainder  is  net  profit — which  is  the  only  profit 
in  the  economic  use  of  the  term. 

The  profit  or  share  of  the  merchant  is  determined  by 
competition.  Nowhere  else  can  competition  be  so  fully 
trusted  to  regulate  prices  and  profits.  If  a  retail  mer- 
chant is  doing  well,  another  is  pretty  sure  to  set  up  a 
store  by  his  side.  The  number  of  men  who  wish  to 
get  into  the  mercantile  business  is  so  large  that  it  is 
claimed  ninety  out  of  a  hundred  fail,  and  meet  with  loss 


THE  SHARE  OF  THE  MERCHANT.       409 

instead  of  profit.  Surely,  this  goes  to  show  that  the 
profits  of  these  men  are  none  too  large.  But  nowhere 
does  business  management  count  for  more.  One 
merchant  in  a  hundred,  serving  his  customers  equally 
well  or  better  than  others,  selling  goods  as  cheap,  and 
keeping  the  variety  they  desire,  makes  thousands  of 
dollars  a  year,  profit,  when  others  are  failing  by  his 
side.  He  knows  what  to  buy  and  how  much,  and 
what  not  to  touch.  His  net  profits  represent  so  much 
real  addition  to  the  satisfaction  afforded  a  part  of  the 
community.  Without  him  goods  would  not  have  been 
so  well  distributed,  or  customers  would  have  paid  a 
higher  price  for  them,  or  been  less  perfectly  satisfied. 
These  increased  satisfactions  are  the  result  of  his  eco- 
nomic labor,  and  he  is  as  much  entitled  to  the  profit 
as  the  workman  to  the  shoes  he  has  made.  That  he 
makes  large  profits  under  competition  (assuming  that 
he  is  doing  an  honest  business),  shows  that  he  is  doing 
more  to  serve  the  world,  more  to  aid  in  satisfying 
wants,  than  others  who  are  making  nothing.  If  any 
one  else  can  perform  the  same  service  for  a  less  share, 
the  opportunity,  under  competition,  is  open  to  him. 
Competition  can  safely  be  trusted  to  keep  merchants' 
profits  down  to  the  minimum.  The  mercantile  busi- 
ness is  not  a  natural  monopoly,  and  never  can  be. 

The  question  arises  whether  profits  contain  other 
elements  than  "  good  luck  "  and  business  management. 
There  are  undoubtedly  sometimes  minor  elements,  and 
hence  the  only  definition  of  profit  is,  "what  is  left 
after  paying  all  other  shares."  Yet  almost  all  ele- 
ments beyond  "  good  luck  "  and  business  management 


410          DISTRIBUTION    OF    PRODUCED    WEALTH. 

which  are  popularly  supposed  to  belong  to  profit  are 
not  profit  at  all.  Let  a  man  start  a  new  business  in  a 
line  where  competition  has  free  play,  and  all  the  profit 
he  makes  the  first  year  will  be  likely  to  be  due  to  his 
management  of  the  business,  and  his  good  fortune. 

Profits,  then,  whether  made  in  Production  or  Ex- 
change, are  what  the  producer  or  merchant  has  left 
after  paying  all  other  shares  and  expenses.  It  has 
been  assumed  that  he  pays  laborers  a  fixed  sum,  as 
wages  ;  although  he  sometimes  bargains  with  them  to 
take  a  share  of  the  profits  in  the  place  of  wages. 
This  is  usually  where  he  has  very  intimate  relations 
with  the  employe,  and  fully  trusts  him.  In  some  lines 
of  business  it  would  be  fatal  to  have  one's  profits 
known.  In  a  poor  year,  when  he  made  nothing, 
the  fact  might  injure  his  credit ;  and  in  a  good  year 
rivals  might  be  tempted  to  engage  in  the  same  busi- 
ness, supposing  that  all  years  are  good.  The  competi- 
tion of  trade  is  so  severe  that  in  many  lines  consider- 
able secrecy  in  the  method  of  managing  one's  affairs 
is  necessary  to  success.  Where  a  clerk  has  a  share  of 
the  profits  in  place  of  salary,  it  is  necessary  that  he 
know  what  the  profits  are,  and  all  details  connected 
with  them.  Such  information  made  public  may  pre- 
vent the  making  of  any  profit  at  all  the  next  year. 
Partners  divide  the  profit  among  themselves  on  terms 
previously  agreed  upon,  as  their  compensation. 


CHAPTER  VII. 

THE  SHARE  OF  THE  LABORER  WHO  WORKS  FOR 
HIMSELF. 

The  laborer  who  works  for  himself  is  in  the  place 
of  the  "  Producer  "  of  Chapter  V.  He  receives  the 
total  product  after  paying  rent  and  interest.  If  his 
labor  is  of  a  kind  that  satisfies  wants  directly,  he  re- 
ceives its  advantage  in  the  satisfaction  of  his  own 
wants,  or  those  of  his  family  or  friends  to  whom  he 
gives  his  services.  If  his  labor  is  of  a  kind  that 
satisfies  wants  indirectly,  he  has  the  goods  produced, 
to  sell  or  exchange  for  such  things  as  he  needs. 
With  the  growth  of  large  factories,  more  men  work 
for  wages  than  formerly,  but  the  largest  line  of  pro- 
duction, that  of  farming,  is  carried  on  by  men  who 
work  for  themselves.  The  farmer  works  for  himself. 
He  may  pay  rent  to  a  landlord,  and  interest  on  bor- 
rowed capital.  He  may  pay  wages.  But  after  pay- 
ing these  shares  he  has  the  remainder  of  the  product. 
He  does  not  get  wages. 

Where  the  laborer  works  for  himself,  his  reward  is 
determined  by  the  price  he  gets  for  the  product,  under 
the  laws  of  Exchange.  The  farmer  often  feels  that 
the  price  of  grain  is  too  low  and  the  prices  of  goods 
are  too  high.  He  pays  more  for  his  agricultural  im- 
plements because  the  iron  workers  receive  what  often 
seems  to  him  a  fabulous  price  for  their  labor.  He 

(411) 


412  DISTRIBUTION    OF   PRODUCED    WEALTH. 

does  not  know  why  everything  is  so  high  and  the 
price  of  grain  so  low,  and  likely  blames  the  merchant 
and  the  grain-buyer  because  these  are  nearest  to  him. 
But  the  contest  is  in  the  prices  of  grain  and  goods, 
where  it  should  be.  He  knows  he  gets  all  he  pro- 
duces ;  and  has  only  the  difficulty  of  every  other  man 
in  the  world  who  wants  to  sell  dear  and  buy  cheap. 
But  he  fights  it  out  in  the  province  of  Exchange, 
where  there  is  some  hope  of  settlement,  and  where 
substantial  justice  is  likely  to  be  done  under  the  in- 
fluence of  competition.  He  is  more  independent  than 
the  wage  laborer,  because  he  works  for  himself. 

In  the  early  history  of  this  country  the  greater 
portion  of  production  was  carried  on  in  this  way,  and 
the  line  of  small  producers  is  not  yet  extinct.  In 
many  branches  of  business  there  will  always  be  men 
who  will  work  for  themselves  and  sell  the  product. 
But  in  other  lines  of  production,  the  small  producers 
have  been  crowded  out  by  large  factories,  made  neces- 
sary by  the  improvements  in  machinery.  Here,  the 
only  means  by  which  laborers  can  work  for  themselves 
is  on  the  plan  of  co-operation.  Co-operation  is  said 
to  have  been  tried  and  failed ;  it  will  probably  fail  a 
good  many  times  before  it  succeeds,  yet  it  presents 
the  only  escape  from  a  much  larger  wages  class  than 
is  desirable. 

By  co-operation  we  mean  the  union  of  those  who 
would  have  been  small  producers  on  their  own  account 
a  few  generations  ago.  It  is  not  so  uncommon  a 
thing  as  we  imagine,  since  it  is  only  an  extended  form 
of  partnership.  Two,  three,  or  four  men  now  unite 


THE  SHARE  OF  THE  LABORER.        413 

in  the  ownership  and  management  of  business,  each 
one  giving  special  attention  to  the  branch  which  he  is 
best  fitted  to  attend  to.  Why  may  not  the  number 
be  extended  to  twenty  or  a  hundred  ?  Co-operation 
demands  as  much  judgment  and  business  sense  on  the 
part  of  each  member  as  was  required  of  a  small  pro- 
ducer a  hundred  years  ago.  But  there  are  thousands 
of  men  capable  of  carrying  on  a  business,  who  can  not 
own  a  plant  costing  hundreds  of  thousands  of  dollars, 
and  there  is  perhaps  nothing  else  left  for  them  to  do 
but  to  work  for  wages.  If  a  hundred  of  them  could 
unite,  they  might  carry  on  a  business  which  would 
rival  that  of  the  largest  producer  in  their  line.  Of 
course,  each  one  must  know  how  the  business  is  man- 
aged, and  what  are  the  profits  and  losses.  They  must 
pay  all  expenses,  and  take  the  total  product  for  their 
share  in  place  of  wages.  They  will  probably  employ 
men  and  pay  wages,  but  they  will  be  satisfied  with 
their  own  share,  even  though  it  is  less  than  the  wages 
they  pay,  since  they  know  it  is  all  there  is. 

The  advantages  of  co-operation  are  two ;  first,  to 
Society  ;  and  second,  to  the  workmen. 

The  advantage  of  co-operation  to  Society  is  that 
the  workmen  know  that  they  get  all  there  is,  after 
paying  rent  and  interest.  A  great  deal  of  discontent 
would  be  avoided,  and  vast  losses  by  labor  troubles 
prevented.  The  members  of  a  co-operative  factory 
are  also  likely  to  be  more  independent  members  of 
society,  and  to  take  a  broader  view  of  its  interests. 
No  matter  how  high  the  dispute  may  run  over  prices, 
the  independent  producer  will  not  stop  work,  as  men 


414  DISTRIBUTION    OF    PRODUCED    WEALTH. 

go  on  a  strike.  He  can  gain  nothing  by  that.  If 
prices  are  too  low,  men  may  close  their  factory,  and 
engage  in  some  other  line  of  production  ;  they  would 
hold  back  their  goods  from  the  market  if  they  thought 
anything  could  be  gained  by  it,  but  they  would  not 
stop  work,  and  would  not  engage  in  the  destruction 
of  property,  or  attempt  to  prevent  other  men  work- 
ing. The  battles  under  Exchange  are  not  so  destruc- 
tive to  the  interests  of  society  as  under  the  wages 
system,  and  the  warfare  is  more  likely  to  be  of  intel- 
lect than  brute  force. 

ADVANTAGES  OF  CO-OPERATION  TO  THE  WORK- 
MAN.— The  workmen  would  gain,  not  only  natural 
wages,  but  the  share  of  profits ;  and  in  time  that  of 
"good  name" ;  and,  in  some  cases,  that  of  monopoly. 
They  might  get  everything  except  rent  and  interest. 
The  poorest  managed  factory  that  could  exist  would 
pay  only  wages ;  the  more  successful  would  pay 
profits. 

Successful  co-operation,  as  success  in  any  large 
business,  depends  on  good  management;  and  good 
management  depends  largely  on  one  good  manager, 
just  as  the  success  of  an  army  depends  on  a  general. 
The  best  known  interest  of  co-operation  in  the  United 
States  is  the  fishing  industry  of  New  England,  which 
has  been  managed  in  this  way  from  the  beginning. 
Each  man  received  a  share  of  the  profits,  though  a 
whaling  vessel  might  be  gone  two  years.  Such  ships, 
however,  had  a  captain,  whose  authority  was  no  less 
than  when  seamen  are  paid  wages ;  and  whose  share 
was  as  large  in  proportion  to  those  of  the  men  as  the 


THE  SHARE  OF  THE  LABORER.        415 

salary  of  other  captains  to  the  wages  of  a  common  sea- 
man. It  is  useless  to  talk  about  a  co-operative  factory 
run  by  a  committee  of  the  workmen.  There  must  be 
some  one  in  control,  and  he  must  receive  either  as- 
large  a  salary  as  a  private  corporation  would  pay  him, 
or  a  large  share  of  the  profits,  else  he  will  transfer  his 
services  to  private  companies. 

Good  management,  however,  by  no  means  depends 
on  one  man  alone,  and  here  wonld  be  the  strength  of 
the  association.  The  foreman  of  every  department, 
and  many  of  the  workmen,  would  be  members,  and 
receive  profits  instead  of  wages.  The  details  of  the 
business  would  therefore  be  well  managed.  Good 
work  could  be  put  out,  which  would  sell  goods  in  the 
future.  The  book-keeper  and  the  traveling  salesman 
would  be  members  of  the  body,  their  compensation 
depending  on  its  profits.  Although  a  considerable 
number  of  men  might  be  employed  at  wages,  there 
would  be  enough  members  of  the  firm  in  every  de- 
partment to  see  that  there  was  no  waste — that  every- 
thing was  done  as  it  should  be,  and  that  the  business 
was  economically  managed.  The  laborers  would  also 
secure  the  share  of  "  good  name  "  as  soon  as  they  made 
one.  No  new  firm  has  a  name  which  is  worth  any- 
thing. It  must  be  built  up,  often  by  years  of  effort. 

If  engaged  in  business  where  competition  is  free, 
the  only  monopoly  the  co-operative  factory  is  likely  to 
deal  with  is  that  of  patents.  So  far  as  patented  de- 
vices are  in  general  use  they  must  pay  royalty  the 
same  as  others.  But  there  is  every  opportunity  for 
minor  inventions  in  their  factory  by  men  who  are  in- 
27 


416          DISTRIBUTION    OF    PRODUCED    WEALTH. 

terested ;  and  patents  owned  by  themselves,  and  trade 
secrets,  are  monopolies  of  which  they  derive  all  the 
benefit. 

The  chief  difficulty  in  the  way  of  co-operation  is 
the  unwillingness  to  pay  a  general  manager  what  such 
a  man  can  command  from  private  companies.  A 
good  manager  will  sometimes  double  the  net  income 
of  a  factory,  though  he  may  labor  fewer  hours  than 
any  other  man  employed  about  it.  There  is  every 
reason  to  believe  that  managers  for  co-operative  facto- 
ries could  be  secured  for  much  less  than  they  could 
make  in  carrying  on  business  for  themselves.  There 
are  vast  numbers  of  men  competent  to  manage  busi- 
ness, who  have  not  the  capital,  and  can  not  borrow  it 
without  security.  A  body  of  laborers  with  a  good 
reputation,  and  a  business  manager  with  an  equal  rep- 
utation, might  more  readily  secure  the  use  of  capital 
than  one  man  by  himself.  A  small  contribution  from 
«ach  man  would  furnish  a  part  of  the  necessary  capi- 
tal, which  would  be  security  for  what  they  needed  to 
borrow.  A  number  of  positions  of  this  kind  will 
tend  to  develop  more  managers  out  of  the  ranks  of 
the  workmen  and  clerks. 

A  co-operative  factory,  then,  gets  the  shares  of 
profits,  good  name,  and  perhaps  monopoly.  Its  mem- 
bers receive  the  total  product  of  their  labor,  out  of 
which  they  have  to  pay  only  rent  and  interest — rent 
for  the  land  occupied,  and  interest  on  the  money  bor- 
rowed. The  co-operative  factory  gets  something  more 
than  the  natural  share  of  wage  labor,  because  it  con- 
tributes something  more  than  wage  labor.  On  the 


THE  SHARE  OF  THE  LABORER.        417 

other  hand,  receiving  profits,  it  must  bear  losses. 
The  failure  of  most  co-operative  factories  results  from 
ii  lack  of  stamina  to  meet  losses,  and  to  accept  half  as 
much  as  could  be  made  in  wages,  for  one  year,  in  the 
hope  of  getting  more  the  next.  There  is  also  a  failure 
to  appreciate  the  advantage  of  owning  one's  own  busi- 
ness, and  of  steady  employment  in  a  bad  year  at  even 
half  wages,  as  contrasted  with  the  chance  of  being 
thrown  out  of  employment  altogether.  Few  co-oper- 
ative men  realize  the  value  of  the  "  good  name  "  and 
business  they  might  build  up  during  the  best  years  of 
their  lives,  which  would  almost  support  them  in  their 
old  age.  In  short,  the  very  qualities  are  demanded 
for  co-operation  that  are  possessed  by  successful  busi- 
ness men  of  "  nerve,"  and  it  would  probably  be  un- 
safe to  admit  any  man  to  membership  in  a  co-opera- 
tive company  who  would  not  have  been  capable  of 
carrying  on  a  small  business  of  his  own  in  the  days 
when  there  were  no  great  factories. 

Co-operation  would  not  abolish  the  wages  class.  It 
could  do  no  more  than  unite  men  of  considerable  bus- 
iness ability,  nerve,  self-restraint,  and  judgment,  into 
companies  for  production.  They  would  naturally  fill 
the  more  important  positions,  of  superintendents,  fore- 
men, book-keepers,  traveling  salesmen,  etc.;  though 
there  is  no  reason  why  the  men  of  the  least  mechani- 
cal skill,  and  those  whose  manual  labor  counts  for  the 
least,  should  not  be  members  of  the  company,  receiv- 
ing the  smaller  share  to  which  they  are  entitled,  pro- 
vided they  have  the  intellectual  and  other  qualifica- 
tions necessary. 


418          DISTRIBUTION   OF  PRODUCED  WEALTH. 

Laborers  who  work  for  themselves — farmers,  small 
producers,  members  of  co-operative  factories,  etc. — re- 
ceive, therefore,  the  total  product  of  their  labor  after 
paying  rent  and  interest,  with  perhaps  other  minor 
shares.  Their  ultimate  reward  depends  on  what  they 
sell  the  goods  for,  and  what  they  pay  for  the  goods 
they  buy  for  their  families.  It  is  merely  a  question 
of  exchanging  what  one  makes  for  what  other  groups 
of  laborers  make.  The  real  contest  is  between  va- 
rious groups  of  laborers — between  the  farmers,  the 
makers  of  agricultural  implements  and  machinery, 
furniture  workers,  house  builders,  and  woolen  and  cot- 
ton spinners  and  weavers  :  it  is  a  contest  of  every 
class  of  laborers  with  every  other.  If  one  class  gets 
more,  another  must  take  less.  There  is  only  so  much 
to  be  distributed.  Shall  the  farmer's  share  be  in- 
creased and  the  iron  worker's  share  diminished,  or 
vice  versa.  Many  laborers  would  receive  a  good  deal 
in  consequence  of  "  good  name."  The  small  farmer 
near  a  city  often  gets  double  price  in  consequence 
of  the  reputation  of  his  produce.  There  would  be 
something  paid  to  monopoly,  but  almost  the  entire 
product  of  the  nation's  industry,  after  deducting  the 
shares  of  rent  and  interest,  would  be  divided  among 
the  groups  of  laborers  working  for  themselves. 

The  merchants  are  one  group  of  laborers,  and  since 
they  come  in  contact  with  all  other  groups,  every  one 
lays  the  blame  for  its  own  small  share  on  them. 
Hence  we  hear  so  much  about  the  "middle  men." 
The  truth  is,  the  merchants  are  as  necessary  as  the 
producers.  What  is  the  product  of  a  shoe  factory 


THE  SHARE  OF  THE  LABORER.        419 

worth  to  the  workmen,  even  if  they  have  the  whole 
of  it?  Why,  precisely  what  they  can  get  for  it. 
But  no  one  family  wants  more  than  a  few  pairs  of 
shoes;  and  if  the  workmen  were  to  attempt  to  ped- 
dle  them  out  by  house-to-house  visits  over  the  coun- 
try, it  would  take  them  longer  than  to  make  the 
shoes.  The  selling  of  a  product  is  just  as  important 
to  the  producer  as  its  production,  and  the  merchants 
can  usually  sell  it  with  less  labor  than  he  can.  They 
understand  the  business  of  selling,  as  he  understands 
the  business  of  manufacturing.  If,  however,  the  mer- 
chants get  a  large  share  of  a  nation's  products  for  dis- 
tributing them,  other  groups  of  laborers  must  get 
less ;  if  all  others  get  more,  the  merchants  must  take 
less.  Unless  we  can  increase  production,  there  is  only 
so  much  to  be  distributed,  and  it  is  a  question  of 
what  laborers  shall  get  the  most.  We  have  seen 
that  competition  fixes  the  share  of  the  merchant;  it 
would  also  fix  the  share  of  every  other  group  of 
laborers.  The  real  contest  would  be  between  groups 
of  laborers — farmers,  carpenters,  masons,  workmen  in 
each  branch  of  manufacturing,  railway  employes,  mer- 
chants' clerks,  etc.  The  more  one  class  receives,  the 
less  other  classes  must  have,  since  there  is  only  so 
much  to  divide.  Each  class  would  seek  to  sell  its 
product  as  dear  as  possible,  and  to  purchase  as  cheap 
as  possible,  and  the  play  of  competition  would  deter- 
mine what  share  each  would  obtain.  Competition 
would  also  determine  the  share  of  each  member  of  a 
group  of  laborers  in  a  co-operative  factory,  relative  to 
the  total  share  of  the  factory. 


CHAPTER   VIII. 

THE  SHARE  OF  THE  LABORER  WHO  WORKS  F0§ 
WAGES. 

It  is  not  within  the  plan  of  this  book  to  enter  into 
any  extended  discussion  of  the  "  wages  question," 
which  would  require  a  volume  by  itself.  An  im- 
portant phase  of  the  labor  question  was  treated  in  the 
book  on  Exchange,  in  the  labor  cost  of  production. 
The  object  of  the  present  chapter  is  mainly  to  show 
the  place  of  the  wages  question  in  the  general  system. 
Wages  are  a  question  of  Exchange,  and  the  practical 
wages  questions  are  applications  of  the  principles  laid 
down  in  the  book  on  Exchange  in  this  volume.  All 
that  has  been  said  of  utility,  value,  supply  and  de- 
mand, competition,  combination  and  monopoly,  finds 
an  application  in  wages  as  well  as  in  prices. 

The  wage-worker  differs  from  the  man  who  works 
for  himself  in  that  he  sells  his  labor,  whereas  the 
latter  sells  the  goods  he  produces.  One  can  more 
easily  see  the  laws  which  fix  the  prices  of  goods  than 
he  can  see  those  which  fix  the  price  of  labor.  The 
farmer  sells  wheat,  and  its  price  depends  on  supply 
and  demand.  The  wage-worker  sells  labor,  and  its 
price  depends  on  supply  and  demand.  Both  are 
questions  of  Exchange.  The  majority  of  wage-  j 
workers  can  probably  get  more  for  their  labor  di- 
rect than  for  the  goods  they  would  produce  in  work- 

(420) 


WAGES.  421 

ing  for  themselves,  even  if  they  were  able  to  bor- 
row the  capital  necessary  to  engage  in  production. 

While  wages  depend  on  supply  and  demand,  it  is 
the  supply  and  demand  for  labor,  and  not  for  goods 
— an  important  distinction.  But  one  element  in  the 
demand  for  labor  is  the  anticipated  demand  for  goods. 
Nobody  will  pay  wages  in  production  unless  he  ex- 
pects to  sell  the  goods  the  laborer  helps  produce ;  un- 
less he  has  reason  to  expect  a  demand  for  the  goods, 
he  will  not  employ  labor.  An  increase  in  the  number 
of  laborers  may,  however,  cause  an  increase  in  the 
demand  for  goods,  since  the  laborers  themselves  con- 
stitute a  demand,  and  with  their  wages  will  buy  either 
the  goods  they  themselves  help  produce  or  those  pro- 
duced by  other  laborers. 

But  the  wage-laborer  does  not  propose  to  produce 
goods  and  sell  them  when  finished,  farmers  and  co- 
operative factories  do  that,  he  is  looking  for  a  man 
who  will  pay  him  wages  every  week  or  month,  and 
take  the  risk  of  selling  the  goods  for  enough  to  pay 
the  cost  of  production.  The  wage-laborer's  employ- 
ment depends  on  finding  such  a  man.  Wages,  there- 
fore, depend  directly  on  the  number  of  employers, 
and  the  number  of  men  they  believe  they  can  profit- 
ably set  to  work.  The  wage-worker  must  have  one 
more  man,  or  company,  between  himself  and  the  con- 
sumer than  the  laborer  who  works  for  himself.  It 
is  an  old  saying  that  "  When  two  bosses  are  seeking 
one  laborer,  wages  will  be  high;  when  a  multitude 
of  laborers  are  seeking  one  boss,  wages  will  be  low." 

Highest  Permanent  Limit  of  Wages. — The  high- 


422  DISTRIBUTION    OF   PRODUCED    WEALTH. 

est  permanent  limit  of  wages  is  what  the  goods  pro- 
duced sell  for,  less  rent,  interest,  and  enough  profit 
to  induce  producers  to  continue  business.  Let  us 
give  a  moment's  thought  to  this  proposition.  The 
wage-worker  can  not  permanently  receive  more  than 
his  labor  produces.  No  one  will  pay  him  wages  un- 
less with  the  hope  of  selling  the  goods  he  makes  for 
enough  to  reimburse  himself.  Anything  else  would 
not  be  wages,  but  charity.  The  workman  can  not, 
therefore,  get  more  than  what  the  goods  he  makes 
sell  for.  But  rent  is  paid  for  the  use  of  a  profitable 
location,  rather  than  take  one  where  production  would 
cost  more.  Capital  can  not  be  had  without  interest. 
If  the  employer  uses  a  patented  process  or  machine, 
he  must  pay  royalty  to  the  monopoly.  Now,  the 
goods  produced  must  sell  for  enough  to  pay  all  these 
charges,  or  the  employer  must  stop  business.  In  no 
case  can  the  laborer  continue  to  get  more  than  what  is 
left  after  paying  rent  and  interest. 

How  about  profits  ?  There  will  be  some  manufac- 
turers who  will  continue  to  do  business  without  profit. 
In  their  factories  the  wage-laborer  may  get  all  the 
goods  sell  for,  less  rent  and  interest.  But  there  are 
better  business  managers  who  will  sell  their  goods  at 
the  same  price  as  the  others,  pay  the  same  wages,  and 
make  large  profits.  There  is  no  reason  why  they 
should  sell  their  goods  for  less,  since  the  same  quality 
of  goods  will  bring  the  same  price  in  the  same  market. 
There  is  no  reason  why  they  should  pay  laborers  any 
more  than  the  factory  which  is  making  no  profit. 
They  might  discharge  their  own  hands,  and  hire  those 


WAGES.  423 

of  the  no-profit  factory.  Wages,  as  well  as  the  price 
of  goods,  tend  to  the  same  rate  for  the  same  service. 
Suppose  wages  should  rise  so  as  to  take  the  profits  of 
the  best  managed  factories ;  then  those  managed  with 
less  ability  would  be  compelled  to  close,  for  they  were 
before  making  nothing — paying  out  in  wages,  rent 
and  interest,  all  the  goods  sold  for.  Now  that  wages 
are  higher  they  can  no  longer  run  without  loss.  But 
the  closing  of  so  many  factories  would  throw  many 
laborers  out  of  employment.  Hence  there  must  be 
profits,  sufficient  to  keep  the  wheels  of  industry  in 
motion,  and  these  profits  must  be  paid  out  of  what 
the  goods  sell  for. 

It  is  the  same  with  the  share  of  "  good  name." 
There  will  always  be  factories  which  have  no  good 
name  to  speak  of.  They  must  pay  expenses,  or  their 
workmen  will  have  nothing  to  do.  But  the  factory 
with  a  good  name  can  sell  its  goods  higher,  and  will 
not  give  this  additional  price  to  labor.  Why  should 
it  ?  It  is  the  good  name  of  the  brand  of  the  goods 
of  the  factory,  not  of  the  workmen  employed.  It 
could  take  the  workmen  from  the  factory  which  has 
no  good  name,  and  still  sell  its  goods  higher. 

The  poorest  managed  factories  with  no  reputation 
must,  therefore,  pay  rent  and  interest  out  of  what  the 
product  sells  for,  and  the  wages  of  the  workmen  can 
not  exceed  what  is  left.  The  best  managed  factories 
will  pay  the  same  wages,  but  will  have  something  left 
for  profit.  The  best  managed  factories  with  a  "  good 
name  "  will  pay  the  same  wages,  but  sell  their  goods 
at  a  higher  price  than  the  others,  and  have  something 


424          DISTRIBUTION    OF    PRODUCED    WEALTH. 

left  for  profits,  and  something  for  the  reputation  of 
their  goods.  Wages  will  be  practically  the  same  in 
all  factories  ;  and  the  highest  permanent  rate  is  what 
the  no-profit  factories,  which  the  demand  for  goods 
keeps  running,  have  left  after  paying  rent  and  in- 
terest. 

RAISING  PRICES. — The  foregoing  shows  the  highest 
limit  of  wages  possible  without  raising  prices.  Assum- 
ing that  the  furniture  workers  of  the  country  are  re- 
ceiving this  highest  natural  limit  of  wages,  if  they 
could  get  their  wages  doubled,  the  price  of  furniture, 
so  far  as  wages  enter  into  it,  would  also  be  doubled  .. 
Profits  would  be  doubled.  All  workmen  who  buy 
furniture  would  then  pay  more  for  furniture,  and  the 
furniture  workers  have  doubled  their  wages  at  the  ex- 
pense of  the  consumers,  nearly  all  of  whom  are  other 
workmen.  The  farmer,  the  iron-worker  and  the  printer 
pay  so  much  more  for  their  furniture,  and  their  real 
wages  or  incomes  are  reduced. 

For  it  is  not  "  nominal,"  but  "  real  wages,"  that 
we  are  seeking.  Nominal  wages  are  those  paid  in 
money.  Real  wages  are  what  the  laborer  can  buy 
with  the  money  received.  If  the  rise  in  the  wages  o£  f 
any  trade  has  the  effect  of  increasing  the  price  of  the  > 
goods  manufactured,  these  workmen  gain  at  the  ex- 
pense of  other  laborers.  It  often  happens  that  the 
natural  fall  of  the  prices  of  goods  in  consequence  of 
improved  methods  of  production  does  not  take  place, 
because  wages  are  advanced.  In  this  case  the  work- 
men in  that  particular  line  reap  the  benefit  that  would 
naturally  go  to  the  public. 


WAGES.  425 

It  is  probable  that  the  farmers  are  at  present  the 
greatest  sufferers.  They  can  not  increase  the  price  of 
wheat,  because  it  is  fixed  by  the  foreign  demand. 
They  get  no  more  money  than  before.  The  wages  of 
workmen  in  many  lines  of  production  carried  on  in 
factories  have  been  increased ;  and  the  farmer  pays 
more  for  the  goods  he  buys.  It  is  true  he  suffers 
from  monopolies,  but  high  wages  affect  him  ten  times 
as  much.  Railroad  steel  and  machinery  cost  more, 
and  railroad  charges  are  consequently  higher ;  so  that 
the  farmer  gets  less  for  his  grain  than  if  wages  in 
rolling-mills,  and  among  railroad  men,  were  lower. 
Economically,  no  two  interests  are  more  opposed 
than  those  of  farmers  and  mechanics.  It  is  for  the 
interest  of  every  class  of  laborers  to  have  wages  in 
other  lines  of  production  as  low  as  possible,  in  order 
that  its  own  wages  may  buy  more  goods.  It  is  for 
the  interest  of  farmers  that  the  wages  of  all  workers 
in  factories  and  on  railroads  should  be  low,  in  order 
that  the  money  received  for  farm  produce  may  buy 
more  goods,  and  that  freights  may  be  cheap.  There 
undoubtedly  exists  an  idea  among  workingmen  that 
the  more  wages  any  class  receives  the  better  for  the 
others.  Nothing  could  be  farther  from  the  truth. 
When  one  class  gets  more  than  the  highest  rate  of 
wages  consistent  with  present  prices,  other  classes 
must  receive  less  of  real  wages,  because  of  higher 
prices.  High  wages  do  not  increase  production,  and 
there  is  only  so  much  to  divide. 

Even  where  wages  sink  to  their  lowest  limit,  and 
there  is  free  competition,  other  laborers  reap  the 


426  DISTRIBUTION    OF    PRODUCED    WEALTH. 

chief  benefit.  In  the  "  sweat-shops "  women  often 
make  clothing  for  a  mere  pittance  ;  but  this  clothing  is 
sold  cheap,  and  is  presumably  bought  by  other  labor- 
ers. The  millionaire  has  his  clothes  made  by  a  fash- 
ionable tailor,  whose  workmen  receive  the  highest 
wages.  The  clothing  that  is  made  by  starving  women 
is  bought  chiefly  by  laborers,  and  they  get  the  benefit 
of  the  low  wages  the  women  receive.  Here  is  un- 
doubtedly an  instance  where  one  class  of  laborers,  the 
sewing  women,  should  receive  more  and  other  laborers 
less  ;  but  it  shtfws  how  wages  are  a  division  of  the 
greater  part  of  all  that  is  produced.  We  can  not 
have  high  wages  and  cheap  clothing  at  the  same  time. 
Recent  investigations  in  London  have  shown  that  the 
sewing  women  who  work  for  the  lowest  starvation 
wages  are  employed  by  men  almost  as  poor  as  them- 
selves ;  that  the  relations  of  employer  and  employe 
are  friendly,  and  that  the  employer  makes  little  more 
than  the  men  who  work  under  him.  Wages  are  so 
low  because  the  clothing  is  sold  so  cheap ;  and  the  low 
price  is  the  only  thing  that  enables  other  poor  persons 
to  keep  themselves  comfortably  clad.  In  American 
cities,  however,  it  is  claimed  that  employers  in  "  sweat- 
shops "  make  something.  Wages  must  be  paid  out 
of  the  annual  production  of  a  country.  A  large  an- 
nual product,  with  a  small  population  to  divide  it 
among,  affords  the  opportunity  for  the  highest  wages. 
It  is  true  that  the  method  of  manufacture  of  cloth, 
ing  by  the  "  sweating  system  "  in  London  may  not  be 
the  most  economical,  and  that  the  work  could  be  done 
cheaper  in  a  factory ;  but  this  does  not  affect  the  prin- 


WAGES.  427 

ciple  involved.  In  the  case  of  monopoly  we  may  have 
high  prices  of  goods  with  low  wages ;  but  where  com- 
petition acts,  either  wages  rise  or  prices  of  goods  fall 
to  the  limit  of  lowest  profit  which  will  keep  up  suffi- 
cient production.  We  often  fail  to  realize  that  cheap 
goods  are  of  as  great  advantage  as  high  wages. 

It  should  be  remembered  that  it  is  only  the  highest 
natural  rate  of  wages  that  can  not  be  increased  with- 
out raising  prices,  and  taking  from  other  workmen. 
We  assumed  that  the  workman  was  receiving  all  that 
the  product  sells  for,  less  other  necessary  shares.  One 
difficulty  with  the  wages  system  is  that  a  workman 
can  not  usually  know  whether  he  is  receiving  this 
highest  natural  rate  of  wages  or  not ;  and  we  are  all 
likely  to  think  that  we  are  receiving  less  than  we 
should.  One  of  the  advantages  of  co-operation  is  that 
the  workmen  get  all  they  produce,  less  rent,  interest, 
etc.;  and  knoiv  that  they  get  it.  This  knowledge  is  the 
most  important  of  all.  It  gives  contentment  to  a  man 
to  know  that,  small  as  his  income  is,  he  gets  all  that  is 
justly  due  him,  all  that  he  produces.  If  competition 
were  unrestricted,  and  there  were  no  friction,  wages 
would  tend  to  this  highest  natural  rate.  New  fac- 
tories would  spring  up,  and  employers  would  seek 
laborers  whenever  wages  were  below  this  standard. 

A  monopoly  may,  however,  not  only  sell  its  goods 
at  the  highest  price  the  public  can  afford  to  pay ;  but 
employ  laborers  at  the  lowest  rate  at  which  they  can 
afford  to  work.  Even  where  there  is  not  a  complete 
monopoly,  there  are  frequently  partial  monopolies; 
and  there  is  always  a  good  deal  of  friction  in  eco- 


428          DISTRIBUTION    OF   PRODUCED   WEALTH. 

nomics,  as  in  mechanics.  Hence  wages  often  fall 
below  the  highest  rate  that  current  prices  would 
bear. 

In  every  effort  to  raise  wages  it  should  be  asked 
first,  Is  it  expected  that  the  proposed  increase  will  raise 
the  prices  of  the  goods,  and  thus  be  paid  by  the  con- 
sumers,— nine-tenths  of  whom  are  other  workmen, — or 
that  the  additional  wages  can  be  paid  by  the  employer 
without  increasing  prices?  Where  competition  is 
active,  any  general  increase  of  wages  is  likely  to 
raise  prices;  where  there  is  a  monopoly,  an  increase 
of  wages  may  come  out  of  the  share  of  monopoly,  or 
may  result  in  raising  the  prices  of  the  goods,  accord- 
ing to  the  circumstances  of  each  case. 

The  wages  of  all  laborers  of  the  same  grade,  in  the 
same  line  of  production,  tend  to  the  same  rate  in  the 
same  locality.  But  there  are,  as  J.  E.  Cairnes  showed 
us,  non-competing  groups,  and  the  wages  of  the  men 
in  each  group  will  be  determined  by  the  supply  and 
demand  for  labor  in  that  group,  without  much  refer- 
ence to  other  groups.  Brickmasons  do  not  compete 
with  jewelers,  or  jewelers  with  printers.  There  might 
be  a  great  scarcity  of  blacksmiths,  but  carpenters 
could  not  take  their  places.  If  laborers  are  scarce  in 
one  line  of  production,  the  prices  of  the  goods  they 
make  are  likely  to  rise  ;  and  their  wages  will  be  in- 
creased at  the  expense  of  the  real  wages  of  other 
classes.  If  the  ranks  of  labor  in  another  line  of  pro- 
duction are  overcrowded,  and  competition  is  free,  wages 
will  be  forced  down ;  and  the  prices  of  the  goods  they 
make  will  proportionally  fall,  so  that  all  other  labor- 


WAGES.  429 

ers  who  use  these  goods  will  gain  at  the  expense  of 
the  laborers  who  make  them. 

It  might  be  supposed  that  laborers  would  at  once 
be  transferred  from  the  line  of  production  in  which 
wages  are  low  to  that  in  which  they  are  high.  This 
happens  in  the  numerous  employments  denominated 
*'  common  labor,"  where  no  previous  training  is  re- 
quired ;  and  the  wages  for  a  great  many  lines  of  em- 
ployment, therefore,  remain  the  same.  It  is  because 
the  wages  are  the  same,  that  the  employments  are 
classed  together  in  the  popular  mind  as  "  common  la- 
bor." In  employments  which  require  previous  train- 
ing, transfers  are  not  so  readily  made.  A  man  does 
not  easily  learn  a  new  trade  after  middle  life.  Young 
men,  however,  in  learning  new  trades,  naturally  select 
those  in  which  wages  rule  highest,  or  in  which  the  la- 
bor is  most  desirable.  The  full  force  of  competition 
is  not  felt,  even  here,  because  many  boys  learn  not  the 
trades  they  choose,  but  the  trades  they  must.  Fre- 
quently one  takes  the  first  opportunity  open  to  him, 
and  the  selection  is  almost  a  matter  of  accident. 

The  question  is  frequently  asked,  "  What  can  be 
done  to  increase  wages  ?"  and  it  suggests  another, 
"  Are  not  the  interests  of  the  farmers,  the  grocery- 
keepers,  and  t*he  innumerable  small  producers  who 
work  for  themselves,  as  important  as  the  interests  of 
the  men  who  work  for  wages  ?"  The  economist  has 
at  heart  the  interests  of  the  whole  people. 

With  the  improved  methods  of  production  ought 
not  the  wage-laborer,  as  well  as  others,  to  get  more  ? 
Most  certainly;  he  does  get  more,  more  nominal 


430          DISTRIBUTION    OF   PRODUCED   WEALTH. 

wages,  and  still  larger  real  wages  as  measured  in  the 
goods  he  buys.  He  may  not  get  as  much  as  he 
should  ;  but  he  certainly  gets  more.  He  gets  more 
because  he  produces  more ;  but  he  can  not  get  more 
than  he  produces,  with  the  deductions  before  men- 
tioned. Improvements  in  production  show  themselves 
in  reduced  prices,  which  benefit  all  classes,  the  wage- 
workers  as  well  as  others.  The  improvements  in  pro- 
duction have,  fortunately,  resulted  in  lowering  the 
prices  of  such  goods  as  the  laborer  uses  to  as  great  an 
extent  as  those  consumed  only  by  the  wealthy. 

There  are  two  reasons  why  the  laborer  feels  that  he 
has  not  gained  as  much  as  he  should : 

(1.)  The  improvement  in  his  condition  does  not 
appear  to  be  as  great  as  it  is,  because  of  the  gain 
to  all  classes.  One's  wants  are,  to  a  certain  extent, 
relative.  He  compares  his  condition  with  those  about 
him.  If  all  other  people  have  as  much  more  as  he 
has,  he  seems  to  himself  no  better  off  than  before. 
If  everybody  wears  coarse  clothing,  it  is  the  fashion, 
and  one  feels  as  well  dressed  as  his  neighbors.  If 
other  people  have  luxuries,  one  feels  his  poverty,  even 
though  he  may  have  absolutely  twice  as  much  as  be- 
fore. One  considers  his  relative,  rather  than  his  ab- 
solute, income.  Yet  the  hope  of  society  is  to  elevate 
all  of  its  members;  and  if  all  receive  more,  the  la- 
borer may  feel  as  poor  as  before.  With  the  great  in- 
crease in  wealth  of  a  very  small  class  of  society,  the 
laborer  is  inclined  to  measure  himself  with  it  rather 
than  with  the  average  of  the  people. 

(2.)    The  laborer  has  not  received  as  much  as  the 


WAGES.  431 

improved  methods  of  production  would  warrant  had 
there  been  no  increase  in  the  value  of  land,  and  in  the 
great  share  of  rent.  In  a  new  country  the  share  of 
rent  is  very  small;  as  the  population  increases,  the 
proportion  of  the  product  which  goes  to  rent  con- 
tinually grows  larger.  It  is  not  only  that  the  laborer 
must  often  pay  more  for  the  land  on  which  to  build  a 
house  than  the  house  will  cost ;  but  the  rent  of  the 
priceless  land  on  which  great  buildings  in  cities  stand, 
the  rent  of  valuable  land  at  harbors  and  railroad  cen- 
ters— all  rent  must  come  out  of  the  nation's  product, 
and  leaves  less  for  labor.  He  pays  more  for  lumber 
for  building  a  house.  In  a  new  country  he  could  build 
a  house  of  logs  on  land  which  he  could  buy  for  a  few 
dollars.  Even  lumber  cost  little,  because  the  timber 
had  not  been  cut  off. 

The  early  history  of  this  country  was  the  golden 
age  of  the  laborer,  in  comparison  with  all  that  had 
gone  before.  Land  was  plenty,  and  if  one  could  not 
get  wages,  he  could  get  a  farm.  Labor  was  scarce 
compared  with  land ;  now,  land  is  scarce  compared 
with  labor.  The  high  wages  of  this  country  have 
been  due,  almost  entirely,  to  the  abundance  of  land, 
and  the  low  rents  as  compared  with  the  densely  popu- 
lated lands  of  Europe.  With  the  increase  of  popula- 
tion, wages  must  continually  become  a  smaller  share 
of  the  nation's  annual  product,  though  not  absolutely 
smaller  for  the  labor  performed.  The  share  of  rent 
will  grow  larger;  and  the  share  of  wages,  smaller. 
Thus  far,  improvements  in  production  have  more  than 
balanced  the  natural  decrease  in  wages  through  the 
28 


432          DISTRIBUTION    OF   PRODUCED   WEALTH. 

growth  of  population.  With  unlimited  immigration 
there  is  no  such  thing  as  maintaining  high  wages  for 
all  classes.  To  increase  wages  does  not  increase  pro- 
duction ;  and  no  nation  can  have  more  than  it  produces. 
A  high  scale  of  living  for  all  the  people  must  mean  a 
relatively  small  population,  with  abundant  capital ;  so 
that  the  Resources  of  Nature  can  be  made  to  produce 
more  goods  in  proportion  to  the  people. 

One  of  the  most  unfortunate  things  about  the  wages 
system  is  the  temptation  to  spend  all  of  one's  wages, 
whether  high  or  low.  A  wage-worker  has  the  money 
every  week,  and  there  are  so  many  opportunities  of 
getting  a  present  satisfaction  out  of  it,  that  it  requires 
more  than  ordinary  command  of  one's  self  to  save. 
The  farmer,  on  the  contrary,  often  has  to  save.  He 
can  not  get  the  money  each  week.  When  the  crop  is 
sold  he  has  something  saved.  He  is  also  compelled  to 
save  in  the  improvement  of  his  land.  This  is  o'ne  of 
the  arguments  for  a  true  plan  of  co-operation.  Work- 
men could  not  safely  allow  themselves  more  than  half 
of  the  ordinary  weekly  wages.  At  the  end  of  the 
year  they  should  have  something  saved,  which  would 
be  needed  as  capital. 

The  principles  on  which  high  wages  depend  are  the 
following : 

1.  Other  things  being  equal,  wages  are  always 
highest  in  a  new  country,  or  a  country  with  a  small 
population  relative  to  its  Resources,  because  the 
share  of  rent  will  be  less,  and  there  will  be  more  to  go 
to  labor.  It  was  for  this  reason  that  real  wages  were 
so  high  in  the  early  history  of  the  United  States  as 


WAGES.  433 

compared  with  Europe.  In  England  the  share  of 
the  land-owners  is  enormous,  far  greater  than  in  the 
United  States. 

2.  Wages  can  be  increased  through  increased  pro- 
ductiveness of  labor.     The  same  number  of  laborers 
produce  more,  and  there  is  more  to  divide.     This  is 
the    second    reason    for    high   wages   in  the  United 
States,  where  labor  is  more  effective  than  in  any  other 
country  in  the  world.     It  is  also  the  principal  reason 
for  higher  wages  in  England  than  on  the  Continent, 
since  English  labor  produces  more  than  in  any  other 
country  of  Europe  or  Asia. 

3.  Wages  will  be  highest  where  there  is  freest  com- 
petition between  employers  in  all  lines  of  production, 
because  laborers  may  then  get  the  share  that  would 
otherwise  go  to  monopoly. 

4.  Wages  will  be  higher  in  a  country    like   the 
United  States,  where  there  are  numerous  employers, 
and  many  men  anxious  to  get  into  business  for  them- 
selves.    In  an  enterprising  country,  with  thousands  of 
men  on  the  lookout  for  a  chance  to  make  something, 
and  willing  to  take  risks,  the  demand  for  labor  will  be 
brisker  than  in  a   slow  country  where  few  new  men 
think  of  undertaking   production,  and    everything  is 
left  in  the  old  channels. 

5.  Success  of  co-operative  factories  would  tend  to 
increase  the  wages  of  laborers  by  withdrawing  many 
wage-laborers  from  the  market.     If  co-operative  fac- 
tories could  be  managed  as  well  as  private  enterprises, 
they  would  soon  absorb  the  best  and  most  intelligent 
laborers  of  the  country. 


434          DISTRIBUTION    OF   PRODUCED    WEALTH. 

PROFIT  SHARING  has  been  put  forward  prominently 
during  the  last  few  years  as  a  means  of  increasing  the 
income  of  the  laborers.  Its  advantages  are  those  of 
co-operation  as  far  as  they  go.  If,  for  example,  wage- 
workers  could  accept  half  wages,  and  half  profits,  we 
might  realize  the  advantages  of  co-operation.  Living 
on  half  wages,  they  might  in  many  cases  save  the 
profits,  which  they  would  receive  at  the  end  of  the 
year. 

Profit  sharing,  as  the  term  has  come  to  be  used, 
however,  does  not  contemplate  any  reduction  in  wages. 
Its  advocates  are  particular  to  insist  that  the  employer 
shall  also  pay  the  very  highest  wages.  How,  then, 
can  a  producer  in  competition  with  others  pay  as  high 
wages  as  they,  and  give  away  part  of  the  profits,  which 
have  been  reduced  to  the  lowest  possible  sum  by  com- 
petition ?  The  answer  is,  that  the  producer  expects 
that  the  offer  of  a  share  in  the  profits  will  be  an  in- 
ducement to  extra  exertion  and  saving  on  the  part  of 
employes,  so  that  more  will  be  produced  at  the  same 
cost,  and  he  will  have  a  larger  profit,  which  he  can 
divide.  That  is,  he  expects  to  pay  employes  some- 
thing extra  out  of  increased  production  due  to  their  ex- 
ertions. Suppose  a  large  corporation  to  make  f  10,000 
a  year,  net  profit.  By  carefulness  and  extra  exertion 
on  the  part  of  every  employe,  that  profit  might  be 
increased,  and  the  corporation  make  $12,000.  It 
could  then  give  its  employes  §2,000,  and  have  as 
much  left  as  before.  Profit  sharing  in  theory  should 
lessen  the  danger  of  strikes,  although  strikes  occur 
under  it.  Now,  a  strike  inflicts  a  good  deal  of  damage 


WAGES.  435 

iii  any  business.  Even  though  the  employer  can  not 
afford  to  yield,  and  his  men  return  to  work  in  the  end, 
lie  has  lost  heavily.  Any  manufacturer  would  pay 
something  to  an  insurance  company  to  be  guaranteed 
against  loss  from  strikes.  If  profit  sharing  were  sure 
to  prevent  them,  the  employer  could  afford  to  give  a 
portion  of  the  profits  to  employes  to  be  protected  from 
the  damage  they  and  their  associates  have  the  power 
to  inflict  upon  him.  This  is  an  application  of  the 
principle  that  the  way  to  increase  the  wages  of  labor- 
ers is  to  increase  production. 

Profit  sharing  is  capable  of  much  further  extension 
than  co-operation.  It  is  not  limited  to  men  who  have 
saved  capital,  or  who  have  the  ability  to  manage  a 
business  for  themselves.  A  very  serious  objection  to 
profit  sharing  is  the  fact  that  few  private  employers 
can  afford  to  make  a  statement  of  their  business  with- 
out risk  of  ruin,  and  the  plan  of  offering  the  employes 
a  share  of  the  profits  without  telling  what  per  cent, 
that  share  is,  can  hardly  have  permanent  success. 
Semi -public  corporations,  which  are  now  compelled 
to  make  public  statements  of  their  business,  appear 
to  afford  the  most  favorable  field  for  the  experiment. 


CHAPTER  IX. 

THE  SHARE    OF   LABOR  WHICH    SATISFIES   WANTS 
DIRECTLY. 

The  share  of  labor  which  satisfies  wants  directly 
differs  decidedly  from  that  which  satisfies  wants  in- 
directly, because  it  is  not  measured  by  material  pro- 
ducts. When  a  hundred  men  have  engaged  in  the 
manufacture  of  shoes,  any  one  can  see  that  their  re- 
ward must  come  out  of  what  the  shoes  sell  for. 

The  share  of  labor  which  satisfies  wants  directly  is 
determined  by  exchange.  This  labor  does  not  pro- 
duce material  commodities  to  divide.  The  boy  who 
blacks  one's  boots,  the  girl  who  serves  in  the  kitchen, 
the  lawyer  who  argues  one's  case,  the  singer  whom 
thousands  flock  each  night  to  hear — all  these  satisfy 
wants  directly.  If  they  satisfy  their  own  wants,  as' 
when  one  blacks  his  own  boots,  or  cooks  his  own  food, 
they  are  thus  far  independent  of  others.  The  circle 
of  wants  and  satisfactions  is  complete  within  them- 
selves. But  when^one  devotes  his  time  to  the  service 
of  others,  he  expects  to  receive  a  fair  share  of  the 
world's  products  in  exchange  for  his  services.  The 
teacher  and  the  lawyer  and  the  physician  are  at  first 
paid  in  money,  but  this  merely  "represents  goods  and 
the  personal  services  of  others.  Money,  here  as  else- 
where, is  only  the  means  by  which  the  exchanges  take 
place. 

(436) 


THE  SHARE  OF  THE  LABORER.        437 

How  WILL  THE  SHARE  OF  THIS  CLASS  OF  LABOR 
,  BE  DETERMINED  ? 

1.  Partly  by  competition ;  the  supply  of  labor  and 
the  demand  for  it.  The  limits  between  which  the 
compensation  will  fluctuate  are  the  least  the  laborer 
can  possibly  accept,  and  the  most  others  can  afford  to 
pay.  The  wages  of  servant  girls  are  mainly  fixed  by 
competition.  The  girl  must  have  shelter  in  the  house 
of  the  employer,  meals,  and  a  sufficient  sum  of  money 
for  clothing.  It  is  impossible  for  her  to  do  this  sort 
of  work  for  less,  and  this  is  all  that  some  girls  receive. 
One  servant  may,  however,  be  worth  four  times  as 
much  as  another ;  and  may  thus  receive,  through  com- 
petition, higher  wages.  There  are  girls  who  make 
such  poor  servants  that  no  one  will  give  them  even 
board  and  clothing ;  the  supply  of  better  help  is  suf- 
ficient to  avoid  the  necessity  of  employing  them. 
Competition  does  not  mean  that  every  laborer  will 
receive  the  same  wages ;  but  that  wages  will  be  in 
proportion  to  ability,  and  that  the  wages  of  a  certain 
grade  of  service  will  be  fixed  at  a  given  rate.  The 
wages  of  servant  girls  are  by  no  means  wholly  fixed 
by  competition.  Other  motives  enter  in,  such  as  a 
desire  for  their  welfare,  custom,  public  opinion,  etc. 

Instead  of  competition,  the  reward  of  some  labor  is 
fixed  by  monopoly.  This  is  partially  true  of  all  per- 
sons who  stand  so  high  in  their  own  department  that 
110  one  can  exactly  take  their  place.  Joseph  Jefferson 
played  Rip  Yan  Winkle  as  no  one  else  could.  He 
charged  monopoly  prices  ;  that  is,  the  highest  sum 


438  DISTRIBUTION    OF    PRODUCED    WEALTH. 

the  public  would  pay.  An  eminent  physician  may 
charge  monopoly  prices,  without  even  the  limitation 
that  the  price  shall  be  the  same  to  all.  He  may  put 
his  regular  charge  so  high  that  only  the  very  wealthy 
can  pay  it,  and  serve  some  less  wealthy  patients  for 
what  they  can  afford  to  pay.  The  laborer  of  rare 
skill  is  entitled  to  monopoly  prices  by  the  highest 
right  in  the  world,  that  of  each  man  to  his  own  labor. 
If  he  does  nothing,  the  world  is  110  worse  off  than  it 
would  be  without  him  ;  and  his  services  are  worth 
what  he  receives,  else  people  would  not  pay  his 
charges.  When  a  woman  sings  as  no  other  woman  in 
the  world  can,  her  power  is  her  own.  She  has  the 
right  to  its  absolute  control.  She  is  entitled  to  what- 
ever anybody  is  willing  to  pay  to  hear  her  song. 

A  partial  monopoly  of  labor  is  found  in  a  profes- 
sion in  which  most  of  the  members  agree  not  to 
charge  less  than  a  certain  sum ;  or  fix  rates  which 
they  regard  as  reasonable,  below  which  nobody  is  ex- 
pected to  go.  Men  who  do  not  belong  to  this  associa- 
tion may  charge  lower  prices,  and  competition  is  per- 
fectly free  ;  but  the  fact  that  a  considerable  number, 
perhaps  the  majority  of  the  best  members  of  the  pro- 
fession, refuse  their  services  at  less  than  a  certain 
price,  has  its  influence.  This  method  would  not  make 
it  possible  to  raise  prices  above  a  certain  rate,  proba- 
bly not  to  maintain  them  above  what  the  wealthier 
class  of  people  regard  as  reasonable ;  but  it  modifies 
the  influence  of  competition,  even  though  there  is  a 
large  number  of  fairly  competent  men  in  the  same 
profession  practicing  with  lower  fees.  It  is  under- 


THE  SHARE  OF  THE  LABORER.        439 

stood  that  the  laborer's  power  of  labor  is  his  own,  and 
that  his  right  to  what  persons  are  willing  to  pay  for 
his  services  is  unquestioned. 

Any  attempt  to  prevent  other  men  from  practicing 
at  lower  rates,  by  force,  would  be  instantly,  and  justly, 
condemned.  Any  man  has  the  right  to  serve  others 
for  as  low  fees  as  he  chooses  to  accept,  and  that  right 
must  not  be  interfered  with. 

3.  The  share  of  labor  which  satisfies  wants  directly 
is  sometimes  determined  by  what  those  one  serves 
think  he  ought  to  have  ;  and  sometimes  by  the  cost 
of  living  in  the  way  which  the  service  requires.  The 
salary  of  a  minister  is  worth  a  moment's  study.  His 
-congregation  and  duties  demand  that  he  shall  live  in 
a  certain  way.  In  a  city  the  people  would  not  expect 
him  to  appear  in  the  pulpit  unless  fairly  well  dressed. 
As  a  teacher,  they  desire  him  to  have  books  and  peri- 
odicals ;  and  it  is  to  their  discredit  if  he  lives  below  a 
certain  standard.  Unless  the  minister  has  means  of 
his  own,  his  congregation  understand  that  they  must 
pay  what  it  costs  him  to  live  in  the  way  they  de- 
mand ;  and  few  congregations  pay  any  more.  When 
his  salary  is  fixed,  the  minister  usually  accepts  the 
lowest  sum  he  thinks  he  can  live  on,  in  the  way  he 
will  be  expected  to  live.  Competition  is  more  likely 
to  show  itself  in  the  case  of  young  men.  Some  con- 
gregations are  always  seeking  for  a  young  man ;  be- 
cause he  can  live,  in  a  way  that  will  be  creditable  to 
them,  for  half  the  money  which  it  will  cost  a  man  with 
a  family.  Young  men  are,  however,  inclined  to  insist 
on  the  same  salary  that  the  church  would  have  to  pay 


440          DISTRIBUTION    OF   PRODUCED   WEALTH. 

a  man  with  a  family ;  and  there  is  no  reason  why  they 
should  not  receive  it. 

What  those  interested  think  one  ought  to  have,  and 
the  cost  of  living  in  the  station  required,  has  more  in- 
fluence in  fixing  the  reward  of  labor  in  other  callings 
than  the  political  economist  often  imagines.  In  some 
kinds  of  labor  it  makes  no  difference,  as  a  matter  of 
business,  to  the  employer  how  or  where  a  workman 
lives,  or  how  he  appears ;  but  a  salesman  must  dress 
and  live  in  a  certain  way,  and  his  salary  must  be  high 
enough  to  cover  the  cost  of  living.  In  conclusion,  we 
may  say  that  the  share  of  labor  which  satisfies  wants 
directly  is  determined  by  exchange ;  and  that  competi- 
tion, combination,  monopoly,  custom,  public  sentiment, 
and  the  cost  of  living  in  a  way  which  the  service 
makes  necessary,  all  have  their  influence. 


CHAPTER  X. 

THE  BOOTY  OF  THE  ROBBER,  AND  THE  WINNINGS 
OF  THE  GAMBLER. 

If  during  the  process  of  production  or  distribution, 
before  the  product  reaches  the  consumer,  a  robber  or 
thief  succeeds  in  making  way  with  a  portion  of  the 
goods,  some  other  share  must  be  diminished.  In  the 
case  of  the  robbery  of  an  express  company,  the  rates 
for  carriage  are  intended  to  cover  the  risk  ;  and  hence 
the  loss  is  likely  to  be  distributed. 

Open  seizure  of  goods  is,  however,  not  so  common 
as  other  forms  of  theft.  A  few  years  since,  a  young 
man  with  a  little  money  was  enabled  to  buy  stock  in 
a  well-paying  railroad.  By  borrowing  money  on  the 
stock  as  fast  as  purchased,  and  by  other  devices,  he 
soon  got  a  large  nominal  interest  in  the  road,  and  had 
himself  elected  to  a  position  which  gave  him  the  prac- 
tical control.  He  at  once  proceeded  to  rob  the  com- 
pany; and,  although  detected  and  put  out  of  office 
before  the  road  had  been  brought  to  ruin,  he  suc- 
ceeded in  stealing  large  sums.  This  loss  probably 
came  out  of  the  share  of  interest  and  the  profits  of 
the  stockholders.  If  the  rates  for  transportation  were 
raised  to  help  cover  the  loss,  it  fell,  also,  on  shippers 
and  producers,  and  through  them  on  labor.  Railroad 
wrecking  has  been  common  in  the  United  States,  and 
many  large  fortunes  have  been  founded  by  the  sheer 
theft  of  property.  (  441 ) 


442  DISTRIBUTION    OF   PRODUCED    WEALTH. 

The  adulteration  of  food,  and  the  deception  in  the 
manufacture  of  goods,  give  the  largest  field  of  robbery. 
What  are  called  "  shoddy  goods  "  are  those  made  to 
deceive  the  ignorant  buyer.  They  do  not  satisfy  his 
wants  as  well  as  he  had  a  right  to  expect ;  and  all  the 
profit  the  manufacturer,  or  dealer,  has  made  by  the 
deception  is  so  much  stolen.  In  most  cases  it  seems 
to  be  stolen  from  the  consumer ;  but  the  consumer  is 
probably  a  producer,  or  at  least  a  laborer,  and  the 
final  return  for  his  labor  is  the  goods  he  gets.  If 
these  goods  are  less  satisfactory  than  he  would  have 
received  through  an  honest  dealer,  his  share  of  the 
world's  product  is  so  much  less. 

The  swindler  does  not  usually  make  as  much  as  the 
others  lose,  because  the  manufacture  of  "  shoddy  " 
goods  is  not  economical,  and  it  costs  something  to 
make  what  is  of  no  utility.  It  costs  something  to 
deceive  the  purchaser.  The  robber  also  causes  actual 
destruction.  A  gang  of  sheep-thieves  once  invaded 
the  field  of  a  farmer  and  killed  a  number  of  sheep  for 
the  pelts,  which  they  took  off  and  made  way  with. 
The  pelts  would  not  bring  fifty  cents  apiece,  while 
the  sheep  were  worth  four  times  as  much.  The 
thieves  had,  therefore,  destroyed  four  times  as  much 
property  as  they  got.  It  is  usually  true,  both  in  pro- 
duction and  distribution,  that  the  booty  of  the  robber 
or  swindler  takes  far  more  from  the  other  shares  than 
he  himself  receives.  It  would  be  cheaper  for  society 
to  support  him  in  idleness. 

It  is  not  necessary  to  stop  to  investigate  the  various 
methods  of  swindling,  or  theft  and  robbery ;  but  no 


THE  ROBBER  AND  THE  GAMBLER.       443 

treatment  of  u  Distribution  "  would  be  complete  with- 
out  calling  attention  to  the  vast  quantities  of  the 
world's  products  which  are  stolen  outright,  and  to  the 
diminished  shares  of  other  persons  on  account  of  the 
dishonest  methods  of  manufacture  and  trade. 

The  booty  of  the  robber  is  frequently  disguised  un- 
der the  claim  of  "  profits  ";  and  it  is  sometimes  im- 
possible for  the  public  to  know  whether  receipts  are 
profits,  or  the  result  of  swindling.  If  the  swindle  is 
not  detected,  the  gain  of  the  swindler  is  likely  to  pass 
for  profits. 

It  is  well  understood  that  gamblers  can  not  live  off 
each  other.  They  must  win  from  men  who  are  en- 
gaged in  other  business,  although  what  one  thus  wins 
may  be  passed  back  and  forth  among  his  class.  Gam- 
blers produce  nothing;  they  do  nothing  to  satisfy 
wants.  They  must  be  supported  by  the  labor  of 
others ;  and  their  support  often  costs  the  modest  in- 
come of  a  good  many  families.  The  Louisiana  lot- 
tery has  made  great  fortunes  for  its  owners,  while  the 
expenses  of  its  management  have  been  wasted.  A 
great  many  millions  of  dollars  are  actually  taken  from 
the  other  shares  of  production  by  direct  gambling,  such 
as  lotteries,  races  and  gambling-houses.  We  may  next 
add  to  this  the  gambling  of  the  boards  of  trade  in 
the  leading  cities.  Not  that  there  is  no  honest  and 
necessary  business  conducted  there ;  but  that  it  is  gen- 
erally recognized  that  mere  betting  on  future  prices  of 
grain  and  stocks  equals  or  exceeds  the  legitimate 
transactions.  How  much  of  the  purchase  of  stocks  by 
outside  parties  may  properly  be  classed  with  gam- 


444          DISTRIBUTION    OF   PRODUCED    WEALTH. 

bling,  it  is  impossible  to  say.  All  business  contains  an 
element  of  risk ;  but  the  risk  of  mining,  of  raising  a 
crop  of  wheat,  or  of  manufacturing,  is  in  no  sense  to 
be  classed  with  gambling,  as  it  is  sometimes  done  by 
unthinking  persons.  Gambling  is  getting  money  as 
distinguished  from  making  money;  and  though  few 
men  have  gotten  rich  by  playing  cards,  the  number  of 
great  fortunes  founded  on  other  forms  of  gambling 
is  larger  than  is  usually  supposed.  Gamblers  waste 
more  money  than  they  save. 


CHAPTER  XI. 

THE  SHARE  OF  THE  GOVERNMENT. 

The  share  of  the  annual  production  of  a  country 
which  falls  to  the  government  consists  chiefly  in  what 
it  takes  by  taxation.  The  cost  of  government  must 
be  met  in  some  way,  and  in  return  for  the  benefits 
conferred  it  takes  the  cost  of  its  maintenance.  A 
civilized  government,  such  as  the  United  States,  is 
worth  more  to  any  individual  than  it  ever  takes  from 
him,  under  even  a  bad  system  of  taxation ;  but  this 
gives  it  no  right  to  take  more  than  is  absolutely  neces- 
sary for  the  maintenance  of  the  service  it  furnishes. 
Government  may  be  regarded  as  a  great  co-operative 
institution  whose  cost  must  be  paid  by  the  members, 
and  whose  benefits  are  shared  among  them.  It  should 
not  unnecessarily  trespass  on  the-  freedom  or  the  in- 
come of  the  individual. 

A  distinction  should  be  made  between  the  expenses 
of  government  proper  and  the  cost  of  carrying  on  any 
business  in  which  the  government  may  be  engaged. 
Among  the  former  may  be  mentioned :  the  cost  of  the 
national  defense ;  legislative,  judicial  and  executive 
departments;  the  public  school  system;  asylums  for 
the  insane,  the  blind  and  the  deaf ;  and  hospitals  for 
the  poor  and  unfortunate.  All  these  and  other  ex- 
penses are  borne  with  no  expectation  of  return. 

The  second  class  comprises  all  government  business 
(445) 


446          DISTRIBUTION   OF   PRODUCED   WEALTH. 

enterprises,  which  should  ordinarily  pay  their  own 
way,  and  in  some  instances  a  profit.  The  government 
should  seldom  or  never  undertake  any  business  which 
is  not  a  natural  monopoly.  The  expenses  of  such 
business  should  never  be  charged  as  government  ex- 
penses, and  the  receipts  should  not  be  entered  as  gov- 
ernment income.  The  accounts  of  each  business  en- 
terprise should  be  kept  separate,  and  only  its  profit 
and  loss  entered  among  the  goverment  expenses.  If 
the  post-office  does  not  pay  expenses,  the  small  loss 
should  appear  in  government  reports  as  a  necessary 
expense  of  maintaining  such  a  convenience  for  the 
people.  The  people  should  understand  how  much 
they  are  paying  for  faw  and  order,  and  how  much  for 
loss  on  business  enterprises.  This  method  of  book- 
keeping would  reduce  the  nominal  national  expenses, 
and  prevent  much  confusion.  It  would  also  make  ex- 
travagance more  difficult.  It  is  true  that  in  the 
United  States  there  is  some  separation  of  accounts  at 
present  by  which  a  book-keeper  can  get  at  the  f  acts ; 
but  the  expenses  of  the  post-office  should  not  even 
appear  in  the  general  government  statement — only 
the  net  loss. 

The  method  by  which  government  revenue  shall  be 
raised  forms  the  general  subject  of  taxation,  which  is 
a  question  of  practical  statemanship  based  on  the 
principles  of  economics.  However  interesting  and 
important  such  a  subject  may  be,  its  consideration 
here  would  carry  us  too  far  from  the  purposes  of  this 
volume.  The  object  of  this  chapter  is  to  call  atten- 
tion to  the  share  of  the  government,  without  discuss- 


THE    SHAKE    OF    THE    GOVERNMENT. 

mg  methods  of    levying  it  or  the  other  shares  from 
which  it  may  be  taken. 

GOVERNMENT  PROPERTY. — The  government,  as  the 
natural  trustee  for  the  people,  has  in  its  keeping  a 
large  part  of  the  Resources  for  the  Satisfaction  of 
Wants.  It  is  the  trustee  for  all  that  the  people  hold 
in  common — the  air,  the  water  of  lakes  and  rivers, 
the  highways  and  public  parks,  buildings  for  public 
schools,  all  public  institutions,  buildings  for  the  use 
of  government  officers,  ships  and  arms  for  national 
defense,  etc.  Every  one  must  be  free  to  run  his 
steamboat  over  government  waters  under  the  same  re- 
strictions. The  streets  of  a  city  and  the  highways  of 
the  country  are  parts  of  the  land  which  is  recognized 
as  government  property.  So  also  are  public  parks. 
The  name  "  Boston  Common  "  has  become  known  all 
over  the  United  States,  and  calls  to  mind  the  New 
England  idea  of  reserved  common  wealth.  Any  in- 
come from  the  rent  of  such  property  is,  of  course,  a 
part  of  the  general  share  of  the  government. 


INDEX. 


Accumulation  of  permanent 
wealth,  262. 

Adulterations  of  food,  442. 

Atmosphere,  the,  26. 

Bank  credits,  346. 

Ballot,  191. 

Bellamy,  Edward,  152. 

Bequest,  right  of,  186. 

Bimetallism,  333. 

Book  accounts,  336. 

Booty  of  robber,  441. 

Buildings,  38. 

"Business,"  378. 

Capital,  242. 

Capitalization,  of  good  name, 
379  ;  of  monopolies,  393. 

Child  labor,  221. 

Chinese,  140. 

City,  proper  density  of  popula- 
tion, 70  ;  model  city,  253. 

Combination,  288. 

Competition,  287,  383  ;  weakness 
of,  299. 

Confiscation  of  property  invested 
in  the  resources  of  nature  must 
not  be  permitted,  166. 

Control  of  Society,  189. 

Co-operation,  412  ;  constant  em- 
ployment under,  208  ;  would 
not  abolish  the  wages  class,  417. 

Consumable  Wealth,  261,  364. 


Consumable  Natural  Wealth,  29. 

Consumable  Produced  Wealth, 
364. 

Copyright,  182. 

Cost  of  production,  296  ;  to  the 
laborer,  303. 

Credit,  339 ;  bank  credits,  346  ; 
how  credits  save  the  use  of 
money,  345. 

Crime,  influence  on  population, 
130;  criminals,  252. 

Currency,  see  Money. 

Danger  of  immigration,  142. 

Deferred  marriages,  effect  of,  126. 

Deferred  payments,  316. 

Demand,  290. 

Dense  population,  advantage  of, 
362. 

Diminishing  returns,  78. 

Discovery  of  Resources  of  Na- 
ture, 68. 

Desire  and  want  compared,  17. 

Division  of  labor,  214,  110. 

Distribution  of  Produced  Wealth, 
Book  VI.,  351  ;  how  distribu- 
tion takes  place,  352 ;  primary 
and  secondary,  353. 

Economical  use  of  resources,  201  ; 
of  Labor,  203;  of  Nature, 
225 ;  of  Produced  Wealth,  242. 

Economv,  definition  of,  9. 


(449) 


450 


INDEX. 


Emigration,  113,  135. 

Exchange,  Book  V.,  271  ;  bene- 
ficial to  both  parties  under  the 
circumstances,  275;  cost  of, 
273;  difficulty  of,  270  ;  distin- 
guished from  production,  273  ; 
exchange  value,  277,  280  ,  how 
exchanges  satisfy  wants,  271. 

Exchange  Values,  277,  280;  limits 
of  are  fixed  by  value  in  use, 
285;  not  the  cost  of  produc- 
tion, 284. 

Famine,  124. 

Farm  or  Factory,  82. 

Fish,  28,  233,  235,  240. 

Finished  goods,  42. 

Financial  panics,  effect  of,  207. 

Forces  of  nature,  27  ;  discovery 
of,  68. 

Forests,  28,  239. 

Forestry,  239. 

Gambling,  443. 

George,  Henry,  mistakes  of,  178, 
366. 

Geometrical  progression,  118, 
131. 

Good  luck,  400. 

Good  name,  share  of,  375. 

"Good  will,"  share  of,  378. 

Government,  445 ;  may  require 
land  to  be  brought  into  use  as 
fast  as  needed,  228. 

Government  land,  176. 

How  to  build  a  city,  227. 

Immigration,  113  ;  refusal  to  per- 
mit, 137. 

Improvements  on  Land,  40. 

Inheritance,  of  wants,  14;  of 
property,  185. 


Interest,  363  ;  an  inducement  to 
save,  370  ;  usually  reckoned  on 
money,  374. 

Interstate  commerce  law,  386. 

Irish  hind  tenure,  179. 

Irrigation,  210. 

Labor,  32  ;  a  changing  force,  34  ; 
child  labor,  223 ;  consumers  of 
direct,  259 ;  constant  employ- 
ment of,  203  ;  definition  of,  32  ; 
development  of,  221 ;  difference 
in  laborers,  89 ;  division  of, 
214;  advantage  of,  215;  how 
far  should  it  be  carried?  217; 
tends  to  belittle  the  laborer, 
219  ;  direction  of  determined 
by  employer,  258 ;  hours  of, 
211  ;  irksomeness  of ,  209;  labor 
power  depends  on  ability  rather 
than  on  the  number  of  the  peo- 
ple, 35  ;  ownership  and  control 
of,  160 ;  prohibition  of  certain 
forms,  223  ;  purposes  for  which 
it  shall  be  used,  257 ;  relation 
to  population,  87;  satisfies 
wants  directly  or  indirectly,  36; 
satisfies  wants  directly,  260, 
267 ;  unemployed,  205 ;  use  in 
satisfying  wants  directly,  260  ; 
utility  of,  53  ;  value  of,  92 ; 
value  to  laborer,  93 ;  wasted 
labor,  209;  when  a  drug  in 
the  market,  88  ;  woman's  labor, 
224. 

Laborer,  cost  of  living,  205  ;  gold- 
en age,  431  ;  improvement  in 
condition  of,  212,  430;  labor- 
ers the  purchasers,  206 ;  must 
live,  206. 


INDEX. 


451 


Laborer's  ownership  of  himself, 
160;  reasons  for,  160;  appar- 
ent exceptions,  161. 

Laborers,  proportion  to  idlers,  90. 

Land,  22  ;  for  residence,  22,  70  ; 
factories,  23,  76 ;  agriculture, 
24,  77  ;  government  control  of, 
228;  improvements  on,  40; 
practical  methods  of  use,  172; 
quality  for  residence,  70  ;  for 
factories,  76 ;  for  agriculture, 
77  ;  speculation  in,  227  ;  value 
of,  169. 

Land  Laws  of  Moses,  168. 

Laisscz  faire,  195,  196. 

Law  of  increase  of  population, 
116. 

Liberty,  desire  for,  160. 

Limit  to  natural  resources,  69. 

Limiting  production,  295. 

Limits  of  Exchange  Value,  285. 

Long  and  short  haul  clause,  386. 

Machinery,  limited  use,  244. 

Multlins,  116,  118. 

Marriages,  deferred,  126. 

Materials,  43. 

Merchants,  share  of,  418. 

Minerals,  28. 

Mill,  John  Stuart,  on  Socialism, 
156;  proposed  plans  of  dealing 
with  land,  178. 

Money,  312  ;  durability,  322  ;  fiat, 
327 ;  gold,  325 ;  how  to  secure 
uniform  value,  330 ;  increase 
in  value,  318 ;  paper  money, 
324,  326;  portability,  312; 
qualities  of  good,  313;  silver, 
321  ;  value  of,  326;  substitutes 
for,  335;  tabular  standard, 


331  ;  what  determines  value  of, 
325. 

Monopoly  (see  also  natural  mo- 
nopoly), 306,382;  capitalization 
of,  393 ;  effect  on  price,  307  ; 
share  of,  382. 

Monopolist,  price  he  will  fix,  308. 

Morality  by  legislation,  254. 

Moses,  land  laws  of,  168. 

Natural  wealth  (see  Resources  of 
Nature),  definition  of,  30  31. 

Natural  monopolies,  194,  382- 
396 ;  government  control  of, 
387;  not  Socialism,  391. 

Needs  and  wants  compared,  17. 

Non-competing  groups  of  labor- 
ers, 428. 

Not  right  to  satisfy  all  wants,  17. 

Ownership  and  control  of  re- 
sources, 151  ;  of  labor,  160  ;  of 
resources  of  nature,  165  ;  of 
resources  produced  by  indus- 
try, 181. 

Opening  of  new  employments  to 
women,  effect  on  population, 
127. 

Overcrowding  of  population,  123. 

Paper  money  increases  value  of 
gold  and  silver,  327. 

Parks,  238;  reservation  of,  180. 

Penn,  Wm.,  and  the  Indians,  184. 

People  the  purchasers,  206. 

Permanent  natural  resources,  225. 

Permanent  Wealth,  262-266,  363. 

Personal  interest  in  scientific 
study;  165.. 

Poor  laws,  effect  on  increase  of 
population,  129. 

Population,  Book  II.,  65  ;    appli- 


452 


INDEX. 


cations  of  laws,  135  ;  assumed 
to  double  in  25  years,  118; 
checks  to  increase  of,  120  ;  in 
the  United  States,  142 ;  classes 
who  should  people  a  country, 
138;  effect  of  education  on, 
147;  law  of  increase  of,  116; 
number  of  people  per  square 
mile  in  cities,  70 ;  population 
and  labor,  87  ;  population  and 
society,  103 ;  population  and 
Produced  Wealth,  96  ;  popula- 
tion and  Resources  of  Nature, 
60;  room  for  increase  of,  139  ; 
stationary,  133 ;  tendency  to 
rapid  increase  fortunate,  122. 

Population  and  Labor,  87. 

Population  and  Produced  Wealth, 
96. 

Population  and  the  Resources  of 
Nature,  66. 

Population  and  Society,  108. 

Practical  business,  251. 

Price,  281. 

Price  of  a  dollar,  275. 

Profit  sharing,  434. 

Profitsof  production,  397;  limited 
by  competition,  403. 

Profits  of  exchange,  406  ;  gross 
and  real  profit,  408. 

Private  Property,  natural  right 
of,  151  ;  what  resources  may 
become,  157. 

Private  Property  or  Socialism, 
151. 

Produced  Wealth  (see  resources 
produced  by  human  industry), 
consumable,  364  ;  definition  of, 
45 ;  economical  use  of,  242 ; 
how  much  needed,  96  ;  perma- 


nent and  consumable,  244 ;  per- 
manent use  of,  363  ;  saving  of, 
101  ;  utility  of,  52;  value  of, 
100  ;  what  fixes  share  of,  366. 

Producers  and  Non-Producers, 
36 

Productions  of  Human  Industry, 
38  (see  Resources  Produced 
by  Human  Industry). 

Produced  Wealth,  45. 

Production  of  consumable  goods, 
261. 

Profits,  definition  of,  404,  410; 
consist  of  two  elements  400. 

Profits  of  Exchange,  406,  408. 

Profits  of  Production,  397. 

Profit  Sharing,  434. 

Prohibition  of  certain  forms  of 
labor,  221. 

Property,  153,  182  ;  disposition 
of  after  death,  185;  moral 
right  of,  182  ;  natural  right  of, 
153;  not  robbery,  185;  what 
resources  may  become,  157. 

Public  opinion,  effect  on  marri- 
ages, 128. 

Purposes  for  which  labor  shall  be 
used,  257. 

Purposes  for  which  resources 
shall  be  used,  256. 

Purposes  for  which  permanent 
Produced  Wealth  shall  be  used, 
243. 

Railroads,  387-389. 

Rent,  175,  355;  does  not  depend 
on  public  or  private  ownership, 
357  ;  how  rent  may  be  reduced, 
361. 

Resources  for  Satisfaction  of 
Wants,  Book  I.,  21. 


INDEX. 


453 


Resources  of  Nature,  21 ;  can  not 
be  increased,  66  ;  classification, 
28,  30;  consumable,  use  of,  231; 
discovery  of,  66  ;  economical 
use  of,  69;  how  many  people 
will  they  support  ?  70  ;  limited, 
69;  must  be  separated  from 
those  produced  by  industry, 
166  ;  ownership  and  control  of, 
1 65  ;  permanent  and  consum- 
able, 29 ;  Permanent,  225 ; 
practical  methods  of  using,  172; 
public  use  of,  236-241  ;  public 
and  private  use  of,  234  ;  satisfy 
wants  directly  and  indirectly, 
30 ;  use  of  inferior,  226 ;  used 
by  private  parties,  235 ,  by  the 
State,  235  ;  utility  of,  51  ;  value 
of,  84. 

Resources  produced  by  human  in- 
dustry, 38  (see  Produced 
Wealth)  ;  economical  use  of, 
242;  how  much  needed,  96; 
ownership  and  control  of,  181  ; 
population  and,  96 ;  utility  of, 
52  ;  value  of,  100. 

Right  of  property,  154,181,  182; 
what  it  includes,  183. 

Rights,  of  children,  161  ;  crimi- 
nals, 162;  idiots  and  insane, 
162;  paupers,  162. 

Risk  in  production,  399. 

Roads,  39. 

Sale  and  purchase  simpler  than 
barter,  278. 

Savings,  101,  247,  250. 

Share  of  good  name,  375  ;  of  the 
government,  445  ;  of  laborer 
who  works  for  himself,  411  ;  of 
laborer  who  works  for  wages, 


420 ;  of  laborer  who  satisfies 
wants  directly,  436;  of  the 
merchant,  406 ;  of  monopoly, 
382;  of  Natural  Wealth,  355; 
of  Producer,  397  ;  of  Produced 
Wealth,  363. 

Society,  46 ;  a  million  people 
compared  with  more,  106 ;  con- 
trol of,  189;  definition  of,  46; 
depends  on  the  wants  and  char- 
acter of  the  people  rather  than 
their  number,  105;  limit  to  the 
number  of  people  desired,  107; 
negative  utility,  55 ;  popula- 
tion and,  103;  satisfies  wants 
by  its  presence,  104 ;  satisfies 
wants  directly,  46  ;  indirectly, 
47,  106;  utility  of,  54;  use  in 
satisfying  wants,  252  ;  value  of, 
106 

Socialism,  151,  193  ;  danger  of, 
182;  definition  of,  151,  193; 
distinguished  from  other  or- 
ganizations of  society,  193; 
destruction  of  independence, 
157  ;  not  a  means  of  saving 
society,  156  ;  private  property 
and,  151  ;  slavery  to  society, 
157. 

Substitutes  for  money,  335. 

Suffrage,  who  should  have  the 
privilege  of,  190. 

Sunday  work,  waste  work,  213. 

Supply  and  demand,  289,  297. 

Support  of  workmen,  207. 

"  Survival  of  the  fittest,"  mistake 
in  popular  conception  of  mean- 
ing of  the  term,  139. 

Swamps  brought  into  use  late, 
229, 


454 


INDEX. 


Taxes,  163. 

Telephone  exchange,  278. 

Timber,  28.  232. 

Title  by  exchange,  184. 

Tools  and  machinery,  39. 

Total  demand,  290. 

Total  supply,  289.  ' 

Use  of  Resources,  201. 

Use  of  the  resource  of  society, 
252. 

Utility,  49  ;  Jevon's  view,  49. 

Unchangeable  value  of  money, 
desirability  of,  313. 

Undertaker,  354,  398,  400. 

Value  in  use,  49,  57  ;  decreases 
with  quantity,  60;  means  scar- 
city, 57  ;  measure  of,  59  ;  shows 
relation  between  wants  and  re- 
sources, 65;  of  Resources  of 
Nature,  84. 

Value  of  money.  283. 

Values  of  a  dollar,  282. 

Visible  supply,  293. 


Wages,  420;  depend  on  supply 
and  demand,  421 ;  effect  in 
raising  prices,  424 ;  nominal 
and  real,  424;  principles  on 
which  high  wages  depend,  432  ; 
when  high,  432  ;  why  increase 
in  has  not  been  greater,  430. 

Wages  system,  420;  unfortunate, 
432. 

Wants,  10  ;  all  should  not  be 
sati-fied,  17  ;  creation,  develop- 
ment and  suppression  of,  11  ; 
spiritual  and  religious,  15. 

Wants  and  Resources,  relation 
between,  65,  95. 

War,  120. 

Water,  25. 

Wealth,  1 ;  natural,  31 ;  pro- 
duced, 45. 

What  shall  be  produced?  256. 

Who  shall  people  this  land?  138. 

Wholesale  and  retail,  301. 

Wild  animals,  28. 

Woman  suffrage,  192. 


14  DAY  USE 

RETURN  TO  DESK  FROM  WHICH  BORROWED 

LOAN  DEPT. 

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Renewed  books  are  subject  to  immediate  recall. 

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